Moldova's real estate market enters new stabilization phase
12:33 | 11.02.2017 Category: Economic
Chisinau, 11 February /MOLDPRES/ - Economic commentary by the MOLDPRES State News Agency.
Although not fully stabilized, the Moldovan real estate market, in 2016, recorded significant decreases in prices and the number of real estate transactions was on the rise. At the same time, among the signs of the market’s maturation is clients’ increased preference for new dwellings, to the detriment of old ones.
It remains to be seen what will happen in 2017, although some estimations can be made from the present moves. According to an analysis carried out by the LARA Real Estate Exchange, the prices for flats on the secondary market might slightly drop in 2017 and the sales will keep at the level of the last year. The demands by potential buyers will depend, first of all, on the economic situation in the country.
“We cannot expect a sharp cut in prices in the near future. The real estate market entered a phase of stabilization,” experts said. Buyers’ preferences might change depending on the “stability of personal incomes, savings accumulated and growth of the economy.” The best signal of the real estate market’s recovery is given by the maintenance of prices or an insignificant reduction on some segments.
In 2016, the decrease in prices for old flats was by slightly more than three per cent, from an average ranging from 545 to 528 euros per one square metre in the Moldovan capital. The flats cheapened by about 41 per cent against the period of beginning of the crisis (2008), when the prices hit the maximum level of 895 euros for one square metre. “One notices a clear-cut tendency of decrease in prices for one square metre on market, the interest in real estate is not decreasing and the number of transactions on the secondary market registered even a relative increase against 2015,” experts of the LARA Real Estate Exchange said.
The most demanded are the one-chamber and two-chamber flats from a price of 17,000 euros to 33,000 euros. Specialists also say that the prices for newer flats maintained at the same level, while the dwellings constructed in the 1950s-1970s, which account for 55-60 per cent of all the real estate, have cheapened considerably – by 10-18 per cent. A drop in transactions is registered namely on this segment of market – a trend that will be kept in the years to come too.
According to the analysis, the buyers have become more exigent, they do not buy anything they come across. The market is oversaturated with supply, at high prices against the new flats of the same class.
Experts find out stabilization also of the supply on the primary market in 2016 against 2010-2015. Yet, given that the residents’ purchasing power is low and the supply is large, “we can expect a drop in prices and a low profitableness in the constructions sector.” Nevertheless, specialists say the prices for new flats are comparable with their costs, so that a significant cheapening is unlikely.
The LARA Real Estate Exchange says the situation on the primary market was similar to the market development in 2015. One ascertains an increased interest of buyers in new flats rather than in old ones. A drop in prices on the primary market up to nine per cent was recorded in 2016. The costs varied from 450 euros to 750 euros for one square metre, depending on the district where the dwelling is placed.
According to the Euro-Mobil company, 218 objects managed by 100 entrepreneurs were under construction in Chisinau in 2016. Most of them were concentrated in the districts of Botanica and Centru. The prices for the new dwellings stand at an average of 547 euros for one square metre, the most expensive ones being in the centre of Chisinau, respectively 806 euros. Data by Euro-Mobil confirm also other assessments spread on market: the new flats last year cheapened by an average of 5.69 per cent, and the highest cut in prices occurred in the suburbs, respectively 12 per cent.
The one-chamber flats remain the most expensive ones in terms of price for one square metre, the two-chamber flats are by 6-15 per cent cheaper and the three-chamber ones – by up to 30 per cent cheaper, in the Centru district of Chisinau. In the new dwellings, one square metre cost on average 557 euros in the Posta Veche district and 887 euros in the Centru district in 2016.
Data by the Cadastru State Enterprise shows that the number of real estate transactions (sale-purchase, donations, exchange, succession), recorded in the register of real estate in 2016, increased by 4.2 per cent. Cadastre offices registered over 113,500 real estate sale-purchase transactions in 2016, which is by 6.7 per cent more against the year before.
Yet, official statistics shows that less and less dwellings are being constructed, the marked is oversaturated with supply. According to the National Statistics Bureau, 3,947 construction authorizations were issued for residential and non-residential buildings in 2016, by 8.5 per cent less than in 2015. By 6.8 per cent less supply was demanded for residential constructions. Distribution according to the environment of residence shows that 2,112 construction authorizations, of all the number of authorizations issued for buildings, were issued in cities and towns and 1,835 ones - in rural regions, down by 11.4 per cent and 5 per cent, respectively, against the level recorded in the same period of the previous year.
(Reporter V. Bercu, editor L. Alcaza)