Should I invest in the Romanian real estate market? What is the potential ROI on rent? How much should I expect to earn yearly on a regular flat? This sort of question would find answers.

Romania’s economy continues to grow, particularly in technology, services, and manufacturing. This growth fuels residential and commercial real estate demand, especially in urban centers like Bucharest, Cluj-Napoca, and Timișoara. With more people moving to cities for better employment opportunities and living conditions, urbanization further drives up real estate demand and prices.

Current Market Trends in Romania’s Real Estate

Residential Real Estate

• Price Trends: As of early 2024, residential property prices in Bucharest have risen by approximately 5.35% year-over-year, with an average selling price of €1,634 per square meter. Similar trends are observed in other major cities, reflecting strong demand and limited supply.
• Demand: There is a high demand for modern, energy-efficient apartments in urban areas. The growing middle class also seeks family homes and larger apartments.
• Supply Challenges: Despite significant construction activity, the supply of new housing sometimes struggles to keep pace with rapid demand growth, especially for well-located, high-quality properties.

Commercial Real Estate

• Investment Activity: Real estate investments totalled EUR 202 million in the first quarter of 2024, a 69% increase compared to the same period in 2023. This robust investment activity highlights the attractiveness of the Romanian market to both local and international investors.

Key Factors Influencing Romania’s Real Estate Market

In what follows, we will present the key factors influencing Romania’s real estate market, including economic and demographic factors that play a crucial role.

Economic Factors

• Growth and Investment: Continued economic growth, infrastructure development, and foreign investment are key drivers. Major infrastructure projects, such as new highways and public transit improvements, make sure areas more accessible and desirable, boosting property values.
• Interest Rates: Low mortgage interest rates currently enhance buyers’ purchasing power, stimulating demand for residential properties. However, any future increases in interest rates could temper this demand by raising borrowing costs.

Demographic Trends

• Urbanization: Increasing urbanization leads to higher demand for housing in cities. The migration of people to urban centers in search of better opportunities continues to push up real estate prices.
• Middle-Class Growth: The expanding middle class, with higher disposable incomes, is seeking better-quality housing, contributing to increased demand in urban real estate markets.

Investment Opportunities in Romania’s Real Estate

Popular Investment Destinations

• Bucharest: As the capital city, Bucharest remains the most attractive destination for real estate investment, offering diverse opportunities in both residential and commercial sectors.
• Cluj-Napoca and Timișoara: These cities are emerging as significant tech and industrial hubs, attracting investments due to their strong economic growth and quality of life.

Emerging Areas

• Transylvania: Known for its tourism appeal, areas in Transylvania are seeing increased interest from investors looking to capitalize on the region’s growing popularity among tourists and expatriates.

Rental Yields in the Romanian Real Estate Market

Rental yields are a crucial metric for Romanian real estate market investors. They represent the annual return on investment (ROI) an investor can expect from rental income, expressed as a percentage of the property’s purchase price. Understanding rental yields helps you assess a property’s income-generating potential and compare it to other investment options.

Current Landscape of Rental Yields in Romania

• National Average: As of Q2 2024, Romania’s average gross rental yield is 6.46%. This means that, on average, an investor can expect to earn 6.46% of their property’s purchase price annually through rent.
• Regional Variations: Yields can vary significantly by location. Bucharest, Cluj-Napoca, Iași, and Timișoara typically offer higher yields than smaller towns and rural areas.
• Property Type: Apartment buildings generally have lower yields (around 5-7%) than single-family homes (potentially reaching 7-8%).

Factors Affecting Rental Yields

• Location: Prime locations in major cities with high housing demand tend to have higher yields. Factors like proximity to business districts, universities, and amenities influence demand and rental prices.
• Property Condition: Modern, well-maintained properties in good locations attract higher rents and, thus, higher yields.
• Rental Market Dynamics: A healthy rental market with high occupancy rates and rising rents translates to better yields. Conversely, an oversupplied market with low occupancy rates can lead to lower yields.
• Property Taxes and Management Expenses: These expenses eat into rental income, impacting the net yield (actual profit) an investor receives.

The figures mentioned above are typically gross rental yields. This means they represent the total rental income before accounting for expenses associated with owning the property. These expenses can include:

• Property taxes
• Maintenance and repairs
• Property management fees
• Insurance
• Vacancy periods

Net rental yield is an investor’s profit after deducting these expenses from the gross rental income. Net yields are typically 1.5-2% lower than gross yields.

Rental income provides a steady, predictable return on investment. However, capital appreciation, or the potential increase in the property’s value over time, can contribute significantly to overall ROI. While Bucharest and major cities have shown potential for capital gains, the short-term outlook is uncertain. Investors need to weigh rental yield and appreciation potential when making investment decisions.

Future Outlook into Romania’s Real Estate Opportunities

The Romanian real estate market is poised for continued growth, driven by economic development and urbanization. However, regional variations will persist, with major cities experiencing the most significant price increases while rural areas may see more modest growth. Economic stability, government policies, and global economic conditions will also play crucial roles in shaping the market’s future.

The Romanian real estate market in 2024 offers promising opportunities for investors and homebuyers alike. The market is set for continued expansion with robust economic growth, urbanization, and significant investment activity. Staying informed about market trends and regional developments will be vital to making successful real estate decisions in Romania.

The post Romania Real Estate Market 2024: A Comprehensive Guide appeared first on Valahia.News.

Why You Should Consider Investing in Dubai Real Estate

Dubai is a global hub for business, tourism, and culture, and its real estate market is booming. With its strong economy, stable political environment, and growing population, Dubai is a haven for investors seeking long-term returns.

Here are just a few of the reasons why Dubai is a great place to invest in real estate:

• Robust economy: Dubai has one of the strongest economies in the world, with a GDP of over $300 billion. This means there is a high demand for property, and prices will likely continue to increase.
• Stable political environment: Dubai is a stable and democratic country with a robust legal system. This provides investors with confidence that their investments are safe.
• Growing population: Dubai’s population is growing rapidly, with over 3 million residents. This means that there is a need for more housing, which is driving up demand for property.
• High rental yields: Dubai offers some of the highest rental yields in the world, making it an excellent investment for those looking to generate passive income.
• Diversified economy: Dubai’s economy is not reliant on any one industry, which means it is resilient to economic downturns.

With many advantages, Dubai is a great place to invest in real estate. If you’re considering moving, our company can help you get started.

Venturing into Dubai’s real estate market is akin to discovering a treasure map, where each plot unveils a world of opportunity. It demands a discerning eye and strategic foresight to unlock its full potential.

Investors seeking to capitalize on the city’s vibrant property landscape will find a mosaic of regulatory frameworks and investment instruments – your compass to navigating this lucrative terrain. Yet, good homes can be found in verified real estate listings, which makes Dubai a very profitable market.

Dubai’s Real Estate Market – Understanding the Dynamics

The real estate market in Dubai, UAE, is characterized by a robust regulatory environment underpinned by a forward-thinking legal framework that assures transparency and security. Potential investors must comprehend these regulations to leverage opportunities effectively. The market exhibits cyclicality, with phases of rapid growth followed by periods of correction common in globally significant real estate hubs.

To apprehend the Dubai real estate market dynamics, one must recognize its unique position as a global commerce and luxury living crossroads. Understanding the factors influencing supply and demand, such as government policies, geopolitical stability, and infrastructural developments, is essential. Moreover, staying abreast with market trends and economic indicators will enhance an investor’s capability to make astute decisions and maximize returns on investment.

Growth Trends in Dubai Real Estate

Dubai’s property market exhibits a resilient growth trajectory, buoyed by strategic infrastructural advancements and a robust influx of international investments.

Amidst economic diversifications and policies facilitating foreign ownership, Dubai has emerged with a “safe-haven” status. Its real estate sector is a testament to its unwavering allure and sustained developmental ethos.

Dubai’s real estate market continuously attracts global investors due to its tax-free environment and high ROI potential.

Real estate in Dubai signals more than just construction booms; it represents a cosmopolitan epicentre for business and luxury. It is a hallmark of architectural innovation and investment magnetism, from the skyline-dominating Burj Khalifa to palm-shaped islands.

Key Areas to Consider for Investment in Dubai Properties

Selecting a suitable locale is paramount in bolstering the potential of your real estate investment in Dubai.

1. Downtown Dubai: The epitome of modern living, holding icons like the Burj Khalifa and The Dubai Mall.
2. Palm Jumeirah: A world-renowned address, its waterfront properties offer exclusive luxury.
3. Dubai Marina: Renowned for its luxury skyscrapers, vibrant nightlife, and stunning waterfront views.
4. Jumeirah Beach Residence (JBR): Offers a prime beachside lifestyle with solid rental yield prospects.
5. Business Bay: A central business district with commercial and residential properties.
6. Arabian Ranches: An affluent villa community appealing to families and long-term residents.
7. Dubai Creek Harbour: An innovative waterfront development envisioned as a historic cultural hub.

Decoding the nuances of each district’s supply and demand dynamics is critical.

An informed investment in Dubai real estate transcends mere acquisition; it encompasses understanding the socioeconomic fabric of your chosen precinct.

Navigating Legal Frameworks

Dubai real estate’s legal frameworks governing property transactions are sophisticated and well-structured. They are designed to secure investor interests and foster a transparent market environment.

Investors must acquaint themselves with the specific legalities of property ownership in Dubai, which are encapsulated in regulatory structures such as the Real Estate Regulatory Agency (RERA) rules and the strata laws. The Dubai Land Department (DLD) orchestrates transactions, oversees regulatory compliance, and implements policies to ensure market stability and protect stakeholders.

Understanding the intricacies of Freehold vs Leasehold ownership is essential. Freehold properties offer greater control and ownership rights, whereas Leasehold interests provide for possession for a predetermined term. Awareness of these distinctions ensures the alignment of investment strategies with the legalities underpinning property tenure in Dubai.

Moreover, compliance with due diligence processes is imperative when conducting real estate transactions. This includes scrutiny of developer credentials, the status of construction for off-plan properties, and the regulatory history of the property. Investors should engage in comprehensive reviews often facilitated by legal counsel to navigate these complexities effectively, securing financial interests while mitigating potential legal encumbrances.

Types of Properties Available in Dubai

Dubai’s property landscape showcases various options catering to diverse preferences and investment scales. Prospective investors can choose from chic urban apartments, palatial villas set within gated communities, high-rise penthouses offering stunning vistas, and meticulously planned townhouses that combine privacy with connectivity. Each category speaks to a particular lifestyle and investor profile, each with distinct features that align with varying objectives and capital outlays.

Alongside residential offerings, Dubai’s real estate market presents commercial spaces catering to various business needs, including state-of-the-art office towers, retail outlets, and expansive warehouses. These properties are situated in strategic locations to maximize accessibility and market appeal. Iconic developments such as the Business Bay and Dubai International Financial Centre (DIFC) are a testament to Dubai’s commitment to providing premium commercial real estate solutions with environments designed to foster growth and symbolize corporate prestige.

From Luxury to Budget Options

Dubai’s real estate spectrum caters to various financial thresholds and lifestyle aspirations.

1. Ultra-luxury Developments: For the discerning few, areas like Palm Jumeirah and Emirates Hills showcase opulent villas, luxury homes and penthouses.
2. Premium Urban Living: Downtown Dubai and Dubai Marina offer high-end apartments with world-class amenities.
3. Mid-market Comforts: Communities such as Jumeirah Village Circle and Al Furjan provide modern living at more moderate prices.
4. Budget-conscious Investments: Discovery Gardens and International City are known for delivering respectable returns on more affordable investments.

Whether seeking indulgence or functionality, Dubai’s property portfolio is rich and varied.

Optimizing the return on investment requires a strategic approach, embracing a vision that aligns with market trends and future growth.

Freehold vs Leasehold Explained

In Dubai’s dynamic property market, understanding the difference between freehold and leasehold ownership is crucial for making an informed investment decision. Freehold properties offer outright ownership indefinitely, while leaseholds involve a lease from the freeholder for a limited time.

Leasehold arrangements typically last for 99 years, although periods can vary. This grants the leaseholder occupancy rather than full ownership rights. Conversely, freehold ownership confers complete control over the property, including the land it stands on, providing more autonomy and potential for capital appreciation.

Consider freehold assets as a canvas for generational legacy—once purchased, the asset can be sold, leased, or bequeathed according to the owner’s wishes. On the other hand, leaseholds often entail restrictions on modification transfers and may come with annual service charges.

Investors are advised to scrutinize the developers’ track record, legal stipulations, and long-term strategic value when contemplating freehold properties. Understanding this classification’s regulatory framework is essential to safeguarding one’s investment and navigating the complexities of property management.

Investing in leasehold properties is an alternative for those not positioned for freehold investments. It often requires less capital upfront but also demands due diligence regarding lease terms, conditions, and the reputation of the freeholder.

Whether freehold or leasehold suits an investor’s portfolio depends on their strategy. Examining financial goals, risk tolerance, and market dynamics is vital to securing a property that meets immediate needs and future ambitions.

Off-Plan vs Ready Properties in Dubai

In Dubai’s real estate market, off-plan and ready properties represent two divergent investment pathways, each with distinctive financial and temporal implications for prospective investors. Off-plan properties are those still under construction or in the pre-construction phase, often enticing buyers with lower initial prices and flexible payment plans. In contrast, ready properties are completed, allowing immediate occupancy or rental income generation.

Off-plan purchases can offer significant capital appreciation once the project reaches completion. Investors may leverage this construction period to benefit from the potential increase in property value. Ready properties provide the security of tangibility, where investors can inspect the physical quality and location, eliminating many uncertainties associated with off-plan purchases.

Yet, the allure of off-plan investments comes with a degree of risk. Project delays (from financial or regulatory constraints) can impact delivery timelines, potentially affecting investment returns. Discerning buyers should factor in the developer’s credibility and project feasibility when considering off-plan options.

Ready properties offer a more immediate entry into the market. Investors can capitalize on existing developments and their established communities, which may boost the property’s desirability and rental yields. It translates into quicker turnarounds for those looking to populate their investment portfolios with income-generating assets.

Evaluating off-plan versus ready properties necessitates a multifaceted approach, deeply interrogating factors such as the investor’s liquidity, investment timeline, risk appetite, and the broader economic milieu influencing Dubai’s real estate landscape. Each avenue requires a tailored strategy to align with the unique objectives and constraints of the investor’s profile.

Ultimately, whether one opts for the potential of off-plan properties or the stability of ready ones depends on the investor’s goals and market insight. Thorough due diligence and strategic planning are paramount to navigating each option’s intricacies and actualizing the expected financial returns.

The Buying Process of Dubai Properties Simplified

Navigating the Dubai real estate sector can be an intricate endeavour, particularly for international investors unfamiliar with local nuances. The systematic procedure involves due diligence, procuring finance, and adhering to regulatory mandates. This multistep path ensures a transparent transaction, mitigating potential legal and financial setbacks.

Ensuring a smooth property acquisition calls for professional guidance to traverse the intricacies of the local market. Experts provide invaluable insights and support, maximizing investment potential while safeguarding against unforeseen complications inherent in real estate transactions.

Essential Documentation Required for Property Acquisition in Dubai

Identifying the necessary papers is vital.

Several key documents are required to ensure a seamless property acquisition in Dubai. These are fundamental to validate your eligibility and intent to purchase. Specifically, a valid passport, proof of residence or visa status, and a sales agreement are non-negotiable prerequisites. Often, additional documentation may be requested to comply with local financial regulations and due diligence processes.

Proof of funds is invariably mandatory.

Potential investors should be prepared to present proof of financial solvency. – typically through bank statements or financial portfolios. This confirms your economic capability to complete the transaction and is critical for the seller and regulatory authorities’ satisfactory completion of due diligence.

Legal counsel ensures document integrity.

Secure legal assistance to verify the authenticity of all requisite documentation. This will ensure that the presented documents align with the statutory stipulations and guard against potential legal contingencies during the transaction process.

Regulatory compliance must be meticulously followed.

Finally, it is imperative to continually be apprised of the ever-evolving regulatory environment within the Dubai real estate market. With the introduction of the Dubai Law No. 19 of 2017 concerning the Real Estate Regulatory Agency (RERA), documentation requirements have become more stringent. Compliance with such regulations is essential for a valid transaction and avoiding legal repercussions or financial penalties.

Step-by-Step Purchasing Guide for Properties in Dubai

Define your investment objectives.

Before diving into the property market, establish your investment objectives. Whether you seek assets for long-term gains, rental yields, or a luxury residence, your strategy will dictate the properties that align with your goals. It is paramount to set these objectives beforehand to ensure a focused and efficient property search within Dubai’s diverse and dynamic real estate landscape.

Conduct thorough market research.

The importance of research cannot be overstated. Market conditions, property values, and regional developments can significantly impact your investment. Savvy investors will examine growth patterns, government policies, and infrastructural projects to forecast potential returns on investment and identify the most promising areas for real estate acquisition in Dubai.

Engage with qualified real estate agents.

Select a reputable real estate intermediary. An experienced agent or broker well-versed in Dubai’s property market can offer indispensable guidance, from navigating the complexities of local real estate laws to identifying properties that meet your investment profile.

Review potential financing options.

Consider the financial routes available – cash purchases, mortgage financing, or other investment vehicles. The right financial plan will hinge significantly on your objectives and the nature of the property being considered, with various loan products available explicitly tailored to investors in the Dubai market.

Execute the legal and transactional processes.

Once your financing is in place, the transaction can proceed. From signing the Memorandum of Understanding (MOU) to the final transfer of the deed at the Dubai Land Department, various legal and procedural steps must be meticulously executed. Adhering to the latest regulations, including those introduced under the Real Estate Transaction Law 2020, is essential for a smooth and compliant property purchase.

Financing Your Dubai Property

With numerous banks and financial institutions offering mortgages in Dubai, finding a suitable financier can be multifaceted. It is imperative to consider interest rates, loan terms, and their impact on your investment returns.

Cash purchases offer a straightforward path but limit leverage opportunities. Consider the implications carefully.

Mortgages in Dubai often require a 25-35% down payment for expatriates. Pre-approval can streamline the purchasing process.

Develop a comprehensive financial plan incorporating expenses like property registration, brokerage fees, and mortgage insurance if applicable.

Investment firms may offer alternative financing options, including private equity or real estate funds, which could facilitate more significant transactions or portfolio diversification.

Lastly, consult financial advisors familiar with Dubai’s market to navigate complex fiscal landscapes. Their expertise can reveal incentives or potential pitfalls associated with property financing.

Maximizing Your Investment in Dubai Real Estate

Strategic alignment of your investment objectives with market trends is paramount to capitalize on the potential of Dubai real estate. Analyze the historical performance data, growth corridors, and regulatory frameworks to align your investment strategy. This rigorous approach is essential to withstand volatility and maximize potential gains.

Incorporating due diligence with a long-term perspective is crucial for yielding substantial returns. Focus on locations with high growth potential and robust infrastructure. Savvy investors often reap the benefits of carefully considered investments in upcoming and strategically located properties within Dubai’s dynamic real estate landscape.

Rental Yields Expectations Off Dubai Property

Exceptional returns are a hallmark of Dubai real estate.

With favourable tax policies and a booming tourism sector, Dubai has been a magnet for real estate investors. High rental demand leads to impressive rental yields, often exceeding global averages. In prime locations, astute investors can anticipate continuing robust performance, offering considerable returns on investment. However, vigilance is critical to assessing the impacts of market fluctuations and economic diversification initiatives on rental yields.

Market variables affect rental yield projections.

Persistent demand drives robust rental yields across Dubai’s diverse neighbourhoods. From the sparkling waterfronts of the Marina to the burgeoning developments in the outskirts, the opportunities for attractive returns are manifold – and, with the right due diligence and asset management, can provide consistent income streams.

Healthy yields are typical in well-chosen properties.

Investors should closely watch the evolving regulatory landscape and economic developments that have the potential to influence tenant demands and, consequently, rental yields, mainly since the expected Expo 2023 could induce significant shifts in the market dynamics. With strategic selection and management of properties, investors can leverage these shifts to their advantage.

Long-Term Value Retention Strategies

A granular understanding of the locational benefits and future development plans is imperative to endure market volatility and secure property value. Only properties positioned in areas with sustained demand and growth potential can promise stable long-term value.

Investment in high-quality maintenance remains a stalwart defence against depreciation. Regular upgrades ensure competitiveness within the market.

A diversified property portfolio across several zones and property types mitigates risks and stabilizes returns, reinforcing resilience in fluctuating market phases. Assets should be periodically reviewed to align with current market trends, demands, and long-term urban planning guidelines.

Leveraging data-driven insights for predictive analytics can optimize investment decisions, ensuring a proactive rather than reactive approach to asset management. Investors must stay informed on infrastructural advancements, policy changes, and demographic shifts to predict future hubs of activity and growth. Aligning investments with these trajectories enhances the potential for sustained or increased property valuations.

Exit Strategies for Dubai Property Investors

Though often overlooked, exit strategies are crucial in real estate investment planning.

Savvy investors continuously assess the liquidity of assets, understanding market cycles and timing sales to optimize returns. Knowing when to hold and when to divest is paramount.

Aligning with strategic partners and brokers can expedite transactions and access buyers’ pools, smoothing the exit process substantially.

Reinvestment options should be evaluated to defer capital gains tax and perpetuate growth in investment portfolios.

Lastly, legacy planning can provide a structured approach for transferring assets, ensuring wealth preservation across generations.

Conclusion: Dubai Real Estate – A Market To Invest In

Investing in Dubai real estate is wise for those looking for long-term growth.

Here are a few things to keep in mind when investing in Dubai real estate:

• Do your research: Before investing, it’s essential to research and understand the market. Our company can provide you with market research and insights.
• Choose the right location: Location is critical when investing in real estate. Choose a location that is close to amenities and transportation.
• Invest in quality: Invest in quality construction and finishes. This will make your property more valuable in the long run.
• Consider professional management: If you are not planning to manage your property, consider hiring a professional manager. This will save you time and money.

Following these tips can increase your chances of success when investing in Dubai real estate.

The post Dubai Real Estate: A Comprehensive Guide to Buying Property appeared first on Valahia.News.

According to the National Bank, the real estate assets of Romanians in 2021 reached approximately EUR 400 billion. However, a high degree of wealth inequality persists.

Romania vs. EU

While real estate assets locally represent a majority power, in terms of financial assets, the share of Romanians represents less than a quarter of total assets, around 24%. There is some local gap compared to the euro area, where financial assets account for about 45% of the population’s wealth.

The real estate properties in Romania exceed 9 million homes

Rising prices have influenced the rise of the Romanian real estate market over time. A significant increase in real estate assets was also recorded in 2008 when the total assets reached 500 billion EUR. Compared to the level of previous years, the real estate wealth of Romanians increased considerably by up to 57.6%.

The National Bank of Romania has shown that the rise in real estate assets indicates the resilience of the real estate market, and this situation is mainly due to the legislation that encourages the holding of real estate assets rather than reinvesting in productive activities. The growth of real estate assets of Romanians was also supported by banks, with mortgage lending rising.

However, some consider that Romania’s market bubble will pop this year. It won’t be the first or last time the real estate market crashes. But, with all this health and financial crisis and the energy prices rising higher than ever, this time, the consequences would last longer for sure.

The post Romanians’ Real Estate Wealth Reaches Record Level appeared first on Valahia.News.

The prices skyrocketed in Bucharest, Cluj-Napoca and other major cities

In 2020 and 2021, despite the crisis that hit many countries globally, the prices of apartments skyrocketed in Romania. Apartments cost 1,960 EUR/sqm in Cluj-Napoca, while in Bucharest, the country’s capital, they cost around 1,630 EUR/sqm. Other cities have high prices, such as Brasov, in the center of the country, near the famous mountain resorts of Prahova Valley, with 1,380 EUR/sqm.

On average, the prices per square meter increased by 15% y/y in the major cities, except for Timisoara, where the prices soared by only 5% compared to 2020.

As the access to loans is not limited, but, on the contrary, encouraged by the Romanian state, tens of thousands of young people are contracting real estate loans from the banks. The ‘First House’ program initiated by the government in 2009 guarantees loans up to a certain sum. Anybody who can prove a stable revenue can access the program. The applicant has to come with an upfront payment of only 5% of the sum to be credited if the house is valued below 70,000 EUR. If the value is more than 70,000 EUR, the applicant has to come with a downpayment of 15% of the deal.

On top of that, the VAT for purchasing a new house is reduced to 5% in certain conditions, which encourages people to storm the banks demanding real estate loans.

This is why Romania has the highest percentage of owners in real estate from all other Europeans.

When will this bubble pop?

If you listen to the developers, they say Romania is not in a real estate bubble and the market is at the correct level. We think they’re wrong.

The prices for construction materials soared because of global inflation. Even in Romania, there is an inflation of 5% in 2021 and an additional 5% in 2022.

Despite Romania’s economic predictions for 2022, which are somewhat optimistic, the real estate market is expected to pop this year. On the one hand, the National Bank of Romania has harshened the conditions to take a loan – the upfront payment must be at least 25% of the total value of the loan. This will hinder more people from being accepted for contracting a loan in the first place.

On the other hand, the prices are too high for an already saturated market. Those who wanted to buy because of the pandemic, encouraged by companies’ ‘work from home policies, have already done that. Those currently looking for a house in 2022 are more prone to wait than rush to buy at the current prices.

Besides, the soaring energy and gas prices will make people think twice before moving out of their current homes. At the same time, the prices for food and services have increased lately, even by 25-30%. Disregard the income, potential buyers have to consider everything before making such a large purchase as a house.

This is why we consider that the real estate market is likely to crash in 2022. The last burst of the market was in 2010 when the crisis dropped the prices of apartments even by 50%. This time, it could be a smaller drop, but our advice for all the investors and buyers would be to consider all the variables before buying a house in 2022.

It’s not financial advice or anything else, but some authors, including ‘Rich Dad’ writer Rober Kiyosaki, consider it’s better to rent a house than buy it. Who knows? Maybe the next real estate bubble will finally teach Romanians a lesson.

The post Opinion: Romania’s Real Estate Bubble Expected to Pop in 2022 appeared first on Valahia.News.

This post is inspired by recent European statistics, which place Romania first by the percentage of house owners.

At first glance, Romania could be happy with the position occupied in the ranking. 96.1% of Romanians own a house, while only 3.9% rent one. Romania is followed by quite a few Eastern European countries: Slovakia, Croatia, Hungary, Lithuania, Poland, and Bulgaria.

In other words, some of the poorest countries in the EU have the highest percentage of house owners. In comparison, some of the wealthiest European Union countries have a meager rate of owners: Germany, Austria, Denmark, or France. Switzerland, which is not in the EU, has the lowest percentage of owners here: 42.3%. Despite the high prices for real estate in Switzerland, you cannot say that Swiss people can’t afford to pay for a house, right?

So, it must be something more than it meets the eye here. The Eastern Europeans prefer buying, not renting, while the Western countries have a lower number of owners. Why?

Which are the advantages and disadvantages of buying or renting a house?

Have you read that famous book ‘Rich Dad, Poor Dad’? If not, maybe you can start improving your financial education by reading it. Its author, Robert Kiyosaki, wanted you to learn to distinguish between assets and liabilities.

Assets, in short, are the ones that bring you money. Liabilities are the ones that cost you money.

A car you use to drive to the office or take the kids from school is a liability, might it be the latest Maybach or Bugatti. Cars cost a lot of cash to buy, and you will spend a lot on fuel and maintenance after buying them. On the other hand, a vehicle can also be an asset if you buy it to offer Uber rides to clients. In this case, it produces money, and the costs for maintenance are deducted from operating the car. The car you bought starts making money for you, so it becomes an asset.

The difference in this example is what you do with the car you buy: use it for your purpose and daily activities or use it to produce money for you.

It’s the same with the house you live in: from the financial perspective, a house is a liability, even though it offers you shelter. After buying it, you have a lot of additional costs, apart from the prices with the loan you took from the bank, in case you didn’t pay for upfront – maintenance costs, devaluation, repairs, etc.

Advantages and disadvantages of buying a house

The most significant advantage here is the perception that you own something. You own a house. Of course, you don’t own anything until the last installment is paid. But at least you have the feeling you pay for your home, not for the prosperity of a landlord.

This is the biggest and the only advantage we can find, to be fair.

The disadvantages of buying a house are many. First of all, you paid a certain amount of money upfront. Not tiny, it was pretty big, of tens of thousands of dollars. Imagine what you could’ve done with all that money. Imagine the investments you could’ve made with all that money. And NO, a house IS NOT AN INVESTMENT.

Advantages and disadvantages of renting a house

The disadvantage here is that you pay the rent to the landlord and that you won’t ever own the house you live in unless you decide to buy it from the landlord. But this is only small compared to all the other advantages.

When renting, the cost of the rent could be much less than the installments paid to the bank. Of course, it depends on the upfront payment, the interest, the fees of the bank, and so on. But rents are lower, on average, than bank installments.

Second of all, you didn’t have to pay the substantial upfront payment the owners did. If you have the money for upfront payment, but you choose to rent a house; instead, that money is yours to do whatever you want with them. Preferably, invest it into something profitable.

Instead of conclusion: a house is not an asset, but some might be okay with this idea

A house is not an asset unless it produces money. Usually, this can be done by renting it. But some might have come to terms with the idea of spending their money on a liability like this.

Owner. It sounds better than a tenant, right? Though, please don’t fall for it. Your ego will cost you lots of money. But, if you’re OK with it, go for it and spend your money on any liability you desire.

The post Why Buying a House is Less Profitable than Renting One appeared first on Valahia.News.

Initially, the Government announced the VAT would be reduced from 19% to 5% starting from January 2021, for houses of up to EUR 140,000. Thus, the house building would have been encouraged and the buyers would have felt the difference in their pockets.

Yet, the Romanian Government decided to postpone the measure until January 2022. The reason for this is, no doubt about it, the high probability for such a measure to diminish the state budgetary revenues.

The VAT for houses remains at 19%, a discouraging value after the potential buyers knew it will be reduced. It is thus expected for the number of the real estate deals to further decrease in 2021.

The post Romanian Government Postpones 5% VAT for House Buying appeared first on Valahia.News.