The real estate market confronts a severe lack of cash, translated in high interest rates for credits, a fact that may cause the prices for apartments and homes to reach at the end of 2008 a level lower than in 2007, said Radu Zilisteanu, spokesman for the Romanian Real Estate Agencies Association (ARAI). According to Zilisteanu, potential buyers are in an expectation period and the number of transactions decreased dramatically. Combined with the Central Bank's policy to make credits more expensive, this situation may continue until the beginning of 2009.
"The real estate market currently faces a severe lack of cash, generated by a series of factors. One is connected to the subprime mortgage credit crisis in the US, in the summer of 2007, which caused a lack of cash on the international markets. On the other hand, Romania - which had a surplus of cash on the market - faced the Central Bank policy of sterilizing large amounts of cash, and now faces a cash shortage. The is reflected in the increasingly expensive credits", said Zilisteanu.
The level of transactions is expected to return to normal at the end of the year or the beginning of 2009, when the cash shortage will end, the interest rates will decrease and the buyers will win back their acquiring appetite.
Romania's Central Bank, BNR, is expected to increase the key interest rate 0.25% on Friday, up to 10%.