According to the analysis conducted by the National Bank, Cluj stands out as the region with the highest ratio between house prices and population income. In Cluj, it takes approximately 10 years to save enough money to purchase a 2-room apartment (55 sqm) without factoring in living expenses, savings, or financial assistance from banks. Additionally, Cluj has experienced the most significant increases in residential property prices.
The residential real estate market in Romania exhibits significant regional disparities in terms of both demand and supply. There is also a concentration of mortgage loans in specific regions, particularly in the more developed areas of the country. This is due to lower levels of inclusion and financial intermediation in the less developed regions. These findings are based on the NBR's report for the year 2022.
“The regional variations in the price-to-income ratio are influenced by both real estate prices and income levels. Cluj county has the highest ratio (10 years as of December 2022) and has also witnessed the most notable increases in residential property prices. Conversely, Giurgiu, Teleorman, and Caraș-Severin counties have the lowest price-to-income ratios, with less than 7 years,” states the report from the National Bank.
Regarding the regional distribution of mortgage loans, the Bucharest-Ilfov region accounts for 35% of the total loans, while the next four counties (Cluj, Constanța, Brașov, and Timiș) represent over 20% (as of December 2022). Conversely, Harghita and Covasna counties have the lowest share of mortgage credit, both in terms of stock and flow, making up only 0.3% of the total.
The analysis conducted by the National Bank also highlights discrepancies in terms of access to the mortgage market. Among the five analyzed development centers, only Timişoara and Bucharest show values above the average indicator. Braşov and Constanţa exhibit similar levels of access to mortgage credit, while Cluj-Napoca has the lowest accessibility.
Furthermore, the rise in interest rates adds pressure to debtors' ability to repay their loans. An increase of 4 percentage points in the interest rate results in a reduction of the affordability index from 1.2% to 0.86% in the case of the capital, Bucharest.
The National Bank's analysis states, “Discrepancies are also evident in terms of access to the mortgage market, with Cluj-Napoca recording the lowest level of accessibility. The increase in interest rates further strains borrowers' repayment capacity. Price developments in the residential real estate market in the near future will depend on various factors, including macroeconomic conditions characterised by high financing costs and increased geopolitical tensions arising from the military conflict between Russia and Ukraine. These factors are likely to reduce potential demand from the population and, consequently, contribute to tempering the rise in real estate prices.”