Hello everyone!
At the beginning of September the Bank of Israel cut the interest rate by a further 0.25%, a move that will make mortgages cheaper, but it is not at all clear that it will bring buyers back to the sales offices.
In Romania the land registry resumed operating after a full month in which it did not function following a cyberattack, and many questions on the matter remain open, in parallel with the fact that since May the country has been operating with a caretaker government, with political instability leading to the loss of about 700 million euros of European Union grants due to failure to meet conditions by the end of August 2026.
This month we would like to draw your attention to:
A. Eurozone inflation jumps to 3.3% in August.
B. Greece: apartment prices keep rising, but the pace has been cut almost in half.
C. Romania: real estate yields among the highest in Eastern Europe, but the flow of foreign capital still lags behind the potential.
D. Bulgaria: housing loans at a record 19 billion euros.
E. Portugal: the pace of transactions is slowing, but the structural shortage continues to support prices.
In the last twenty years I have seen many good deals and quite a few deals that blew up. What separates them is almost never luck - it is who sat across from you and what you bothered to check before you signed.
May you have a year in which these two work in your favor.
Shana tova - a good, healthy and sweet year to you and to all the House of Israel.
Enjoy the read,
Adv. Ilan Leibovitch and the office team
Eurostat: eurozone inflation jumps to 3.3% in August - Cyprus, Bulgaria and Greece among the countries with the sharpest jump
On September 1, Eurostat, the statistical office of the European Union, published the flash estimate for annual inflation in August 2026: 3.3% in the eurozone as a whole, compared with 2.9% in July. The main cause of the rise was energy prices, which jumped to 14.3% on an annual basis, compared with only 10.3% a month earlier.
Among the countries in which we accompany clients, the gap between countries was especially sharp. Cyprus recorded 5.2%, the second highest in the entire eurozone, after Lithuania alone, and a sharp jump from 4.4% in July. Bulgaria, which joined the eurozone only at the start of the year, recorded 5.1%, the third highest of the bloc's 21 countries. In Greece inflation rose to 3.7%, compared with only 2.7% in July, the sharpest jump relative to the previous month among the countries we examined. Portugal recorded 3.6% (compared with 3.1%), and Italy 3.3%, according to the parallel figure published by the Italian statistical office (Istat) on the same day, the highest level in Italy in almost three years, there too led by energy prices, which jumped to 17.0% annually.
In Romania, which is not a eurozone member, the trend is the opposite: annual inflation is in fact easing sharply, from 10.4% in June to 8.2% in July, the latest official figure published by the National Institute of Statistics (INS); August data have not yet been published.
What stands out here is not the single number, but the shared direction: five of the six countries are moving in the same direction - upward, at an accelerated pace from the previous month. And when the acceleration comes mainly from energy prices, it does not always fit completely with what is happening in the local real estate market, but it is translated within a short time into construction costs, local interest rates, and sometimes also into demands for rent indexation that did not appear in the original contract.
Greece
The VAT relief on new apartments
Since 2019 Greece has been operating a relief that is renewed every year: a suspension of the 24% VAT on the sale of new apartments, in place of which a reduced real estate transfer tax of only about 3%-3.09% applies. This is a voluntary mechanism from the developer's point of view; he may choose to remain subject to regular VAT if he prefers to offset his input tax, but in practice most developers choose the suspension. The relief, which has already been extended several times since it was first introduced, is now extended until December 31, 2026.
Why this matters in practice
The financial difference is not marginal. On a property worth 200,000 euros, full VAT of 24% would add 48,000 euros to the price, raising the total cost to 248,000 euros. Under the current suspension track, the reduced transfer tax adds only about 6,000 euros, so the total cost stays around 206,000 euros. That is, the gap between the two tracks can reach tens of thousands of euros in a single transaction, and the relief is among the main factors preventing another sharp jump in new apartment prices in a market already considered expensive relative to local incomes.
The next decision: another extension, and perhaps abolition of the capital gains tax
The Greek government is now considering two additional significant tax decisions. The first is whether to extend the VAT suspension beyond the end of 2026. The second, and perhaps more dramatic, is the permanent abolition of the 15% capital gains tax on the sale of real estate, a tax that was supposed to apply to the difference between the purchase price and the sale price, but has been suspended again and again since it was enacted and in practice never actually took effect. Instead of another temporary postponement, a final and permanent abolition is now being considered, a move that would remove a significant source of uncertainty for sellers, buyers and investors alike.
These decisions are expected to be decided and published in the speech of Prime Minister Kyriakos Mitsotakis at the opening of the Thessaloniki International Fair (ΔΕΘ), scheduled for September 5, 2026. This is the traditional forum in which the Greek government announces each year the main tax policies for the following year, and in recent years it was used precisely to announce similar extensions of the VAT relief on real estate. This year, the speech is expected to present a multi-year economic program for 2027-2030, so there is a reasonable chance that a decision on real estate will be presented within a broader framework of tax relief.
Apartment prices in Greece: the rise continues, but the pace has been cut almost in half
The Spitogatos index, based on asking prices from millions of listings on Greece's largest real estate site, shows a clear picture for the second quarter of 2026: prices are still rising across Greece, but at a much slower pace than a year ago. The average asking price for an apartment rose 6.1% relative to the corresponding quarter, compared with a jump of exactly 9.7% a year ago. That is, the pace of increase was cut almost in half within a single year. Athens (Attica) rose 5.3% (compared with 9.4% a year ago), and Thessaloniki 7.7% (compared with 11.4%). In the rental market the slowdown is far more dramatic: a rise of only 1.3% nationwide, compared with 7.2% a year ago - almost a complete halt.
The gap between the most expensive and the cheapest areas in Greece remains huge, and even shows how fragmented the market is: the southern suburbs of Athens (4,231 euros per sq.m.) and the Cyclades (4,063 euros per sq.m.) at the top, versus Kastoria in northern Greece, only 585 euros per sq.m., less than an eighth of the price in the southern suburbs. Within Attica itself the gap is even sharper: Vouliagmeni leads with 7,364 euros per sq.m., almost five times the cheapest area, Varnavas, where a sq.m. stands at 1,407 euros.
And here is the figure that is truly surprising: the areas that jumped the most this year are not the familiar luxury ones, but rather ones that were until recently considered “budget.” Drosia, in the Athens suburbs, jumped 30.2% in a year, the sharpest jump in all of Attica. Spitogatos attributes this, among other things, to a rise in the supply of garden apartments and new single-family homes with a high energy rating, which come at a higher price. Daphne (27%), Lykovrissi (25.6%) and Tavros (22.5%) are also on the same trend. In other words, the price rise is spreading to areas that until recently were the cheap alternative.
Greece's banking system is opening the mortgage tap. The average loan-to-value ratio (LTV) has risen, and banks are now willing to finance up to 90% of a property's value, a figure that partly explains why even in the “cheap” areas there is still demand pushing prices up.
It is important to remember that the Spitogatos index is based on asking prices, not actual transactions; the final price is usually lower. For comparison: the Bank of Greece, which measures by actual valuations, reported a rise of 5.7% in the first quarter of 2026 (the latest figure it published), slightly more conservative than Spitogatos, but in exactly the same direction.
Our media coverage
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Israelis who bought apartments for tourist rental in Madrid thought they knew the rules, but the rules changed. The Madrid municipality now prohibits tourist rentals in mixed-use buildings in the historic center, and the fines reach about 190 thousand euros. Before entering a deal in Madrid - what are you allowed to do with the property after you have signed.
True, foreign purchases of American real estate fell 19% in the past year. But what the headline doesn't say: in the year before that they rose 44%. An Israeli investor who shifts money from the USA to Europe because of a single headline, without checking the regulation in the new destination, is not managing risk - he is swapping one risk for another.
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Romania
Romania's land registry collapsed for a whole month: the chronicle of the crisis, and the implications that remain after it
On July 14, 2026, ANCPI, Romania's National Agency for Cadastre and Land Registration, discovered a breach of its information systems. The National Cyber Security Directorate (DNSC) later confirmed that it was a ransomware attack: the attackers encrypted and wiped some of the servers on which the authority's applications run. e-Terra, the system through which every cadastral registration and every registration of a right in real estate in Romania passes, collapsed entirely, together with the institutional email systems. The relatively good news: the central database, the one that holds the ownership and rights records themselves, was not harmed. The damage was to the operational infrastructure, not to the information.
What exactly was blocked
Romanian law prohibits a notary from certifying a transaction that transfers a right in real estate without first checking an up-to-date extract from the land registry. Without access to e-Terra, this check became impossible, and with it every transaction that requires registration: sale contracts, gifts and exchanges of real estate, mortgages, preliminary sale agreements under the “Nordis Law” (207/2025) for apartments under construction, and every cadastral action such as registration, deletion, or merging and division of plots. Obtaining a land registry extract for ordinary due diligence was also not possible. What did continue to operate: preliminary sale agreements signed privately (other than those subject to the Nordis Law), lease contracts, and powers of attorney, everything that does not require immediate registration of a proprietary right.
A race against the August 1 clock
The timing turned the technical failure into a real economic crisis. Thousands of buyers who had signed a preliminary sale agreement before August 2025 were supposed to sign the final contract by July 31, 2026, in order to enjoy a reduced VAT of 9% instead of 21%, a gap that can reach tens of thousands of lei in a single transaction. Without e-Terra, no notary could certify these signatures. The Romanian parliament acted urgently: the Senate, followed by the Chamber of Deputies, approved on July 29 a law extending the deadline to September 30, 2026, for a single apartment with a usable area of up to 120 sq.m. and a value not exceeding 600,000 lei before VAT. The law took effect on August 7 and also includes a mechanism for refunding the difference to anyone who had already completed a purchase at full VAT between the original date and its entry into force.
Force majeure or a mere technical failure
Alongside the practical coping, a legal debate developed among Romanian law firms over whether the crisis constitutes “force majeure” under Article 1351 of the Romanian Civil Code. The prevailing analysis is that even if ANCPI itself may be considered at fault for an information security failure, from the standpoint of the parties to a transaction (seller, buyer, bank, notary) the event is external, unforeseeable and unavoidable, and therefore meets the cumulative conditions. However, there is an important reservation: force majeure relieves contractual liability, but does not automatically extend statutory or administrative deadlines, such as the validity of building permits and urbanism certificates, which keep running regardless of the system's functioning. Unlike VAT, no parallel legislative extension has been published for these deadlines.
The return to operation, in stages and under heavy load
After about three weeks of “no firm date,” ANCPI announced on the evening of August 7 that the security tests were progressing well and a return to activity was expected within a week. e-Terra was indeed restarted in stages from August 11: first for the authority's staff and notaries, from August 12 for the other professionals, and from August 20 the online payment mechanism also resumed operating. The authority preserved the legal order of priority: every application submitted physically during the shutdown period was recorded with an exact date and time of receipt and entered the registry in that same order, and the validity of extracts that were valid at the time of the incident was automatically extended by the number of days the system did not operate. However, the return was accompanied by an unusual load: on August 12 alone about 69,788 applications were recorded at the cadastral offices, compared with about 42,057 on the same day in 2025, an increase of about 66%, and requests for extracts for notarial verification were almost five times the usual. The balance of payment confirmation documents for applications not submitted by July 15 remained valid for registration until September 5.
From the writer's desk:
The system is functioning again, but the process of closing the gap between the 94 thousand applications that accumulated and the pace of ongoing handling is expected to continue for some time. For clients with active transactions in Romania, two key messages: there is no reason to fear losing priority or document validity, the authority took explicit steps to protect both, but it is worth verifying with the local notary the exact status of each file, and examining whether there is exposure to an administrative deadline that did not receive a legislative extension. Beyond the immediate implications, the incident is a broader reminder for every cross-border real estate transaction: the bureaucratic infrastructure behind every transaction, registry, notary, tax authority, is not merely a procedural matter. When it falls, it can stop an entire market, even when the money, the buyer and the seller are completely ready.
A caretaker government, a deadline that passed, and 770 million euros wiped out
Romania will lose about 770 million euros of the European Union's recovery fund money. The deadline for completing the reforms to which it committed passed on August 31, and parliament did not approve the new public-sector pay law - a central condition set by the Commission. The reason is not technical: since May 5 Romania has been run by a caretaker government with limited powers and without a parliamentary majority. This is the first measurable result of four months of political paralysis, and not because the country did not want to, but because a caretaker government simply cannot pass legislation.
How they got here
At the end of April the Social Democratic Party (PSD) withdrew from the coalition and submitted a no-confidence motion together with the far-right party AUR, which is in opposition. On May 5 the motion passed with 281 votes to 4, and Ilie Bolojan's government was removed after about ten months in office. The dispute: the austerity measures. Since then Bolojan himself has been running a caretaker government; the constitution allows the president to appoint an interim prime minister for renewable periods of 45 days, but a caretaker government is not authorized to pass substantive reforms. A first attempt to form a new government failed on June 4, and the parties have not yet reached agreement.
What exactly was lost, and is it final
The amount will be deducted from the 8.44 billion euros still due to Romania, about 40% of the entire recovery plan, whose total size is 21.41 billion. The final calculation will be determined when the Commission examines the last payment request, which must be submitted by the end of September. The minister for European funds, Dragoș Pîslaru, estimated that Romania will still absorb over 90% of the grants.
The wording of President Nicușor Dan deserves attention: he stated that the parties kept their commitment not to submit a separate bill to parliament, thereby jointly taking upon themselves the loss of the amount. That is, not an accident, but a joint decision. According to him the legislation is almost technically ready and may pass by the end of the year, but the money attached to this stage will not come back.
What it costs in practice
The real price is not the 770 million euros, but the cost of money. The yield on Romanian ten-year government bonds stood at 6.09% in July 2026 according to Eurostat data, a figure significantly higher than is customary in the Union, which makes raising government debt more expensive and filters through the banks into business credit and mortgages. The three major rating agencies hold Romania at BBB-, the last grade of investment rating, all with a negative outlook. The reasons repeat themselves: a large and persistent deficit, rapidly growing debt, and political division.
The background: a deficit of 7.9% of GDP in 2025, the highest in the European Union, and public debt that crossed the 60% of GDP mark for the first time ever at the end of March 2026. On the other hand, and this is the part less reported, budgetary convergence is in fact working: the deficit in the first seven months of 2026 fell to 2.34% of GDP compared with 3.99% in the corresponding period, a decline of 37% in nominal terms. Tax revenues rose 15.4% and net VAT 26.5%, while public spending rose only 2.9%. The improvement comes from tax increases and collection, not from growth; the economy grew 0.7% in 2025 and is expected to tread water in 2026.
Romania offers real estate yields among the highest in Eastern Europe, but the flow of foreign capital still lags behind the potential
A new report by the consulting firm Colliers, surveying the real estate investment market in Eastern Europe in the first half of 2026, paints an interesting picture for Romania: the country continues to offer some of the highest yields in the region, but is still far from realizing its full potential in terms of foreign investment volumes.
According to the data, Romania attracted about 300 million euros in real estate deals in the first half of the year, down from about 400 million euros in the corresponding period last year. This is only about 5% of the total investment volume in the six largest economies of Eastern Europe (Bulgaria, the Czech Republic, Poland, Romania, Slovakia and Hungary), and this while Romania makes up about 18% of the combined GDP of those countries. This gap, Colliers notes, shows that the local market is still far from what both investor appetite and the size of the economy justify.
In terms of yields, Bucharest continues to lead the region: about 7.5% in offices, 7.75% in industrial and logistics properties, and 7.25% in shopping centers - significantly higher than Warsaw, Prague or Bratislava. Offices made up about 60% of the transaction volume in Romania in the first half, the highest share since 2022.
Robert Miklo, Partner and Head of Capital Markets at Colliers Romania, notes that a number of large deals are currently in process, and if completed, 2026 could close with an investment volume of about one billion euros, which would make it only the second year since 2007 in which the market crosses that threshold. Among the risks for the second half: high interest rates, a rise in Euribor, debt refinancing needs, and geopolitical tension in the region.
From the writer's desk:
The practical conclusion for anyone holding property in Romania or considering buying is not in the headline. The average asking price for a new apartment in Bucharest reached 2,636 euros per sq.m. in June, a rise of 21% in a year, the sharpest among the large cities; second-hand 2,259 euros per sq.m., a rise of 10%. But with inflation of 9.6% in the first quarter, housing prices fell by about 1.6% in real terms. Anyone who reads “21% rise” and sees a profit is looking at the wrong number.
And at the same time the whole cost structure has changed: VAT on a new apartment rose from 9% to 21%, the dividend tax rose from 10% to 16% from January 1, 2026, for individuals and companies, for residents and non-residents alike, and local taxes on buildings and land were raised this year. Anyone who holds a property through a Romanian company feels the change in dividend tax directly on the bottom line, and we recommend that clients with such a structure re-examine it. And for anyone who built a financial model two years ago, the numbers it relied on no longer exist.
And a reminder from the previous issue: the extension of the deadline for buying an apartment at the reduced 9% VAT, granted following the ANCPI shutdown, expires on September 30. For anyone with an open transaction that meets the conditions, about three weeks remain.
The Romanian market still offers higher yields than Western Europe and Bucharest remains the most liquid market. But political uncertainty is not a backdrop to a deal, it is part of it, and it is priced today in the cost of financing.
Bulgaria
Housing loans at a record 19 billion euros
Data from the Bulgarian National Bank (BNB), published on August 27, 2026, show a new record in the volume of housing loans in the banking system: 19.022 billion euros at the end of July 2026, an increase of 25.7% from 15.133 billion euros at the end of July 2025, that is, an addition of about 3.88 billion euros within a year. This is a continuation of the sharp expansion of housing credit even in the period after Bulgaria's move to the euro at the start of 2026, although the annual growth rate slowed slightly, from 26.4% in June to 25.7% in July.
Demand is expected to remain stable
The central bank's survey of commercial banks indicates that demand for mortgages is expected to remain stable in the third quarter of 2026 as well, with no signs of significant slowdown. This is an important figure for anyone following the Bulgarian real estate market: strong domestic demand is one of the factors that continue to support the price rises recorded in the market since the move to the euro.
What this means for someone seeking a mortgage as a foreigner
The picture is significantly different for foreign buyers. While residents of Bulgaria can obtain financing at a loan-to-value ratio (LTV) of up to 80%-85% of the property's value, subject to restrictions set by the central bank, foreigners usually receive financing of only 50%-70%, meaning equity of 30%-50% of the property's value is required. The repayment period for foreigners is usually limited to about 20 years, compared with up to 30 years that the central bank permits for residents. The interest rate for foreigners is higher, usually in the range of 3.5%-5%, compared with about 2.7%-3.2% for local residents. Loans to foreign citizens are given only in euros, and banks usually require a minimum monthly income of about 2,000 euros, and sometimes also a local guarantor.
A comparison trend following the move to the euro
Bulgaria's move to the euro at the start of 2026 is beginning to affect the terms for foreigners themselves. The three leading banks in Bulgaria, owned by European financial groups, are now developing products aimed at narrowing the gap between financing terms for residents and financing terms for foreigners. At the same time, the market expectation is that the average mortgage interest rate will fall from the current range of about 3%-4% to below 3%, as Bulgarian banks enjoy cheaper access to funding sources from the European Central Bank.
Cyprus
An economy growing at three times the European average, and 3 rating agencies on the way to review it
Official data published on August 26, 2026 place Cyprus at the top of the European growth table: the Cypriot economy expanded by 3.3% in the first half of 2026, a pace almost three times the European Union average. The unemployment rate stands at only 4%, a figure that places Cyprus among the strongest countries in the Union in terms of the labor market.
Inflation is rising, and the government responds
Alongside the sharp growth, inflation is on a clear upward trend: from 0.5% in January 2026 it climbed to 3.1% in June, and the government itself forecasts that it will reach about 4% by the end of the year. In response, the Cypriot government allocated 200 million euros to address the rising cost of living, a move that indicates inflation has become a real political concern, and not just a passing phenomenon.
Beyond the growth and inflation figures, the government also presents strong fiscal performance: a budget surplus of 1.1% of GDP was recorded in the first half of 2026.
Three rating agencies on the way, and two more in November
Cyprus is expected to receive three credit rating decisions in September 2026 alone: DBRS Morningstar is expected to publish its decision on September 4, followed by Standard & Poor's and Capital Intelligence Ratings on September 18. Fitch and Moody's are expected to complete their reviews in November 2026. At present, Cyprus holds investment-grade ratings from all the major agencies: Fitch raised the rating in May to A- with a positive outlook, Moody's affirmed an A3 rating with a stable outlook on May 29, and DBRS affirmed an A rating with a stable outlook in March, explicitly citing the high growth rate, the resilience of the banking sector and internal political stability.
From the writer's desk:
For clients examining an investment in Cyprus, the combination of strong macro data alongside a concentrated round of rating reviews within a two-month window is a relevant moment to follow: a further rating improvement, in particular from Fitch which already shows a positive outlook, may improve the state's financing costs and add credibility to the local real estate market, while the rising inflation is a reminder that the picture is not unambiguous and it is worth following the actual cost of living as well, not only the growth data.
Portugal
The pace of transactions is slowing, but the structural shortage continues to support prices
Eurostat data published during July place Portugal in tenth place among 18 European Union countries in the rise in the number of housing transactions for 2025 - an increase of 10.5%. This is a clear slowdown compared with the 15.2% growth rate recorded in 2024, in which the Portuguese market recovered sharply after a 19.8% plunge in transactions in 2023, against the background of rising mortgage rates and high inflation. At the top of the European growth table are Slovenia (+29.9%), Lithuania (+22.8%) and Austria (+21.4%); a decline in the number of transactions was recorded in only three countries - Croatia, Bulgaria and Poland.
Alongside the slowdown in the pace of transactions, housing prices in Portugal continued to climb to a new high in the first quarter of 2026. An industry market analyst points to a picture that is not unambiguous: foreign buyers are reducing their presence, but local buyers continue to carry a considerable part of the activity; rent in Lisbon is stabilizing, and in Porto a slight decline was even recorded, while access to housing remains a central social challenge in the country. This picture, which combines record prices, a slowdown in transactions and a decline in foreign demand, illustrates a market that no longer behaves as a uniform bloc: the first-home market is different from the investment market, and Lisbon does not live the same reality as Porto or the Algarve.
The structural factor that continues to support prices despite the slowdown in transactions is a chronic shortage of supply: according to a report by a premium real estate marketing company active in the market, the pace of completion of new construction in Portugal stands at about 21 thousand housing units a year on average (2020-2024), compared with about 104 thousand a year in the early 2000s - a gap that continues to prevent a significant price correction even when the pace of transactions slows.
From the writer's desk:
A market in which the number of transactions slows but prices continue to rise is a market in which timing alone no longer guarantees a return - the specific choice of property, location and segment (first home versus investment, Lisbon versus the Algarve) is what decides. We recommend that clients considering entry into the Portuguese market in the coming months base their decision on local data specific to the area and the segment, and not on the general national price trend.
Accurate as of the issue date. Laws, tax rates and procedures change; check the current position before any decision.
Translated from the Hebrew original. עברית