After a sudden rise of over 20% in prices, the real estate market took a break. The transactions in the second quarter witnessed the lowest level in the last five years, said Veaceslav Ioniță, expert in economic policies of the Institute for Development and Social Initiatives “Viitorul”, IPN reports.
According to the expert, apartment price in the Republic of Moldova started to rise in the second half of 2020, increasing too suddenly after 12 years of decline and this scared the potential buyers away. This tendency will continue in the short term during the next few months. In the long run, the number of real estate transactions will be large in the municipality of Chisinau, where many apartments will be bought for investment purposes.
Traditionally, 14,000-15,000 real estate transactions, especially to purchase apartments, were annually held in the Republic of Moldova until 2015. Starting with 2019 until present, the number of transactions increased to about 28,000. In the second quarter of this year, the number of transactions in the country and in the municipality of Chisinau was the lowest in the past five years.
An explosion has been seen in home loans, which until 2005 hadn’t been in demand. Starting with 2018, the value of mortgages has risen to 10 billion lei. The average area of a new apartment is now 65 square meters. A lot of apartments are currently bought for investment purpose, for being leased out.
The Republic of Moldova is turning into a market where the people live in rented accommodations. Fifteen years ago, only 6% of the inhabitants of Chisinau municipality rented houses. At present, this figure stands at about 13%. The European average is of 40%. Apartment rental is typical of persons who spend less than 20% of their incomes on food a month. Of those who live in rented accommodations, 45% are single persons who do not live with parents. They have a job and appropriate incomes, but do not own dwellings. Another 25% are young families without children. 10% are families consisting of two persons, usually a parent and a child.
The highest apartment prices in Moldova were recorded in 2019-2020. Since the second half of 2020, the prices grew by at least 20% and this is the biggest rise in the past 14 years. In Chisinau, new apartments cost over €800 per square meter, while resale apartments – over €670.
The apartment prices rose too suddenly and sales in the second quarter of 2021 declined to the lowest level in the past five years. “Our market is not yet ready for this sudden rise of 20%, which scared the citizens, who became more prudent. The real estate market is adjusting to the new conditions. I think an annual rise of 10% would be easier assimilated,” stated Veaceslav Ioniță.
According to him, the accessibility of an apartment in the Republic of Moldova is closer to the European average. 9.8 years of work and gains are needed to buy an apartment. The European average is 6.9 years.
