Contents
Supply
The residential supply continued to pull back in 2025, dipping by 5% in the January-September period over a year ago, likely reaching below 58,000 units for the full year, the lowest level since 2017. Consequently, there is a different nuance compared to previous years: this time around, Bucharest and its surrounding areas actually saw a modest bump in deliveries of residential units, and the decline was pretty generalized in the rest of the country. That said, Bucharest-Ilfov supply is still more than double the average seen in the decade prior to the pandemic, while for the rest of the country, deliveries are slightly below the average.
This trend highlights the strong demand seen in Bucharest, which can also be noted in a handful of major cities. The cooldown in supply can be attributed to either administrative factors (particularly in Bucharest, where authorizing a project is a highly unpredictable process) or some developer caution amid rising construction costs and negatively impacted household earnings in recent years. For now, supply is unlikely to grow significantly over the shorter-term.
Real wage decrease not significant and extended enough to drive housing demand down substantially
Source: Eurostat, Colliers
Demand
On the demand side, the news is mostly tilting towards the negative side of things, but there are some mitigating factors. Overall, transactions involving individual units (mostly apartments, per the National Agency for Cadastre and Land Registry) dipped by around 5% at a national level in 2025; nevertheless, the overall level is still some 20% above the pre-pandemic average, so we wouldn’t necessarily call this a soft year when looking at the headline. We would also mark the uneven nature of the year, which started a bit slower amid elevated internal uncertainties, then climbed during the summer amid the planned VAT hike for residential properties and ended the year on a decent note.
We can also note the somewhat uneven nature of developments nationwide. Bucharest saw a bit of a deeper decline than the national average in 2025 (almost 10%), but it was nearly 28% above the average in the pre-pandemic period. Hence, it displayed bigger swings between extremes. Cluj-Napoca was the only major city to see a modest increase, overperforming a bit.
Overall, not a soft year and it can be easy to see that the reasons behind the softer demand are quite serious. If anything, we can consider the market as quite resilient given the challenges.
A cooler labour market with real wage growth again moving in negative territory (amid higher inflation, with particular increases in energy prices), sticky elevated interest rates and an increased VAT for residential transactions could have warranted a more significant correction if demand was not quite substantial.
In fact, we see signs that the buyers are coming to terms with the market’s realities: for instance, despite the elevated interest rates which lead to higher monthly instalments than a few years ago, mortgage-backed purchases of homes saw a jump in 2025 from the previous year, reaching around 58% of all purchases, per Colliers estimates.
Supply-demand gap remains substantial, despite sales coming down a bit in 2025 from post-pandemic peaks
Source: Eurostat
We also want to emphasize the recently published home purchase intentions index from Eurostat. This highlights intentions to buy a home within the next year and while this has retreated from all-time highs seen a few years ago, it is still at levels well above the pre-pandemic period, highlighting a fairly resilient consumer. We also need to emphasize that while real wages are down (again, after decreasing in 2021 and 2022), this is coming after a very strong decade of gains which saw the purchasing power of the average wage earner double over the past decade.
Prices
Overall, despite a softer demand and lower supply, the gap between these two remained significant and continued to exert upwards pressures on prices, albeit moderately. Across large cities, average growth remained moderate, around 5%, but differentiation between sub-segments became more visible than in previous years. Well-located new homes (good infrastructure and connectivity, reputable developers, higher energy-efficiency standards) recorded stronger increases, supported by limited supply and a relatively stable base of solvent demand. At the same time, older stock, especially buildings without thermal rehabilitation, has been increasingly penalized by buyers, given higher energy costs and a widening “total cost of living” gap versus newer developments.
Meanwhile, in submarkets with intense competition or where projects entered sales at a time when purchasing power was being eroded (through inflation and higher taxes), we observed selective, deal-by-deal discounts and more aggressive commercial packages: parking spaces included, partial furnishing, flexible payment schedules or larger negotiations versus list prices. This does not indicate a broad-based correction, but rather a more “selective” market where final pricing depends much more on product quality, location, launch timing and sales pace.
Outlook
The longer-term outlook remains supported by robust fundamental demand, as Romania faces one of the highest overcrowding rates in the European Union. The matter of timing the market and making sure that households can afford that remains a different matter. The affordability and real purchasing power especially will matter more in the shorter term and should they improve a bit, may cease to be a downside factor for the residential market. In fact, we believe that we would need to see substantial deterioration of the labour market indicators (meaningful job losses coupled with an extended period of real wage decrease) to see some material downside price pressures accumulating. As things stand now, we see few such signs.
For now, the first half of the year should see a bit more subdued demand-side forces with a potential for recovery in the second half of the year. That said, when looking at the authorizations of residential buildings, the pipeline does not look too robust. This means that unless demand moves significantly lower, the gap relative to supply is set to remain substantial, meaning it may be difficult for prices to drop, with a modest increase in the cards as well. In the future, should demand pick up again more materially, we could see more material upside price pressures accumulating down the line, though this is a multi-year trend, less of a theme for 2026.
Overall, a more constructive outlook could emerge in the second part of the year provided fiscal consolidation continues in a predictable manner, without creating additional shocks or new imbalances, and assuming the external environment remains broadly stable. Under this scenario, a gradual improvement in sentiment together with a progressive normalisation of financing costs could support a moderate rebound in transaction appetite, particularly in major cities and well-positioned projects where underlying demand fundamentals remain strong. The prospect of lower interest rates (central bank rate cuts to come as soon as Q2 2026) should also help with pushing the market sentiment in a more favourable direction later in the year.