The real estate market in the Republic of Moldova is reborn. The old apartments will be more accessible, and the new ones
The real estate market in the Republic of Moldova currently, after a continuous stagnation for several years, is reborn for the second time after gaining independence. After 13 years now, apartment prices have fallen for more than a year, they are rising. The apartments on the secondary market will be more and more accessible, and the ones on the primary market will be more and more difficult to procure. An analysis of the real estate market is made by Veaceslav Ioniță, the economic policy expert of the Institute for Development and Initiatives (IDIS) “Viitorul”, during the Friday, November 19 edition of the show “Economic analysis with Veaceslav Ioniță”.
To make that analysis, the expert used data from various real estate agencies and provided to the National Bank (NBM). According to the expert, this year, 2021, it is harder to buy an apartment than a year ago and than 13 years ago, when the real estate market entered a continuous decline.
In 2006, says the economist, you had to work 36.4 years to buy a 70-square-meter apartment in Chisinau. Subsequently, there is a substantial increase in salaries in lei and a stable foreign exchange, a process started in 2007, the ability of Moldovans to pay increased sharply until 2020, and the price of apartments kept falling. In the years 2019-2020 the price of new apartments increased substantially, and the old ones practically remained unchanged or even were in a slight decrease. Thus, Moldovans arrived in 2020 that they have to work 8.5 years to buy an apartment of 70 meters kept. But this year, after 13 years of low apartment prices, the financial effort to buy an apartment has worsened, and Moldovans must, compared to last year, already work 9.5 years to be able to buy a 70-meter apartment . squares. The explanation is, according to the expert, the salaries of Moldovans have increased, but apartment prices have risen much faster, by almost 30% for new apartments, than salaries.
The economic analyst mentions that in 2008, in the fourth quarter, when the real estate market reached its highest level, a 70-square-meter apartment in Chisinau cost almost 61 thousand euros. After that, followed the continuous decrease in 2018, when for an apartment of 70 square meters were needed about 38 thousand euros. At the end of last year, apartment prices had been rising for half a year, they already needed 42 thousand euros for a 70-square-meter apartment. This year, in the third quarter, an apartment of 70 square meters in Chisinau, already costs 50 thousand euros.
Veaceslav Ioniță also stated that for the first time in the third quarter of this year an average annual salary in the Republic of Moldova exceeded 5 thousand euros. Until 2016, it was on a straight line – of 2800 euros. Since 2017, the average monthly salary per economy in the Republic of Moldova has started to increase significantly. In the third quarter of this year, it is estimated that it will be, on average, 9100 lei. As a result, we have an average annual salary of 5073 euros.
This year, the expert remarks, we have a salary increase of 150 euros, compared to last year, and by the end of the probability it will be 170-180 euros. However, the price of apartments has risen much more. For this reason, citizens’ access to the apartment has become more difficult than last year. However, the expert estimates that this year, in the Republic of Moldova, will be the largest number of apartment transactions in the history of the country: between 29 and 30 thousand apartments will be sold.
The economist also claims that in 2007-2008 the price of new apartments was lower than the old ones. In 2009, they were almost equal. This situation remained constant until 2016-2017, because they were all cheaper.
The economic analyst also stated that after the global furniture crisis in 2008, the price of apartments in most countries fell significantly, but the market returned in 2-3 years. In the Republic of Moldova, the market was in decline until 2018, prices have been falling for 10 years. Between 2018 and 2019, price stability was registered. From 2019, the price for new apartments started to increase insignificantly, and from 2020 for old ones. Last year there were increases of 12% in a single quarter, at the beginning of this year – 5%, and in the third quarter of this year – just over 3%. There is currently a slowdown in apartment prices.
In my opinion, to Veaceslav Ioniță, a market segmentation is becoming more and more clear in the Republic of Moldova. There is a 33% difference between new and old apartments. About 25% of Moldovans prefer, want and can buy new apartments, which already have much higher prices, and in the coming years the price of apartments could not be up to twice as high as the old ones.
According to the economist, we have not yet reached the prices that were in 2008, when you had to buy 900 euros per square meter of apartment space, compared to the current average of 702 euros. However, even if those times go back, today it is easier to buy an apartment than 15 years ago. The financial instruments available today 13 years ago simply do not exist. Currently, Moldovans can easily access real estate loans.
This year, the expert noted, the real estate loan portfolio increases monthly by about 280 million lei. In 2019, 191 million lei were given monthly. In the period 2005-2017, no real estate loans are granted. This year, in the first nine months, Moldovans borrowed more than in any year in the history of the Republic of Moldova. In nine months, the banks have already allocated 2.5 billion lei to citizens for the purchase of real estate, and by the end of the year they will most likely allocate another billion lei.