Rusty

Posted on by janosgaspar

With the latest governmental decision, the number of projects in designated rust belt action areas reached 81 in Hungary. Estimated 46 thousand dwellings1 is to be built on these brownfield sites. The sole purpose of this post is to follow these projects and to see how they will or will not help the recovery of the new residential construction sub-market in Hungary.

Status on 28 January 2026.
The upswing has not been too intensive lately, but many XXL projects have moved closer to under construction status.
—
Completed: 3 620 dwellings
Under construction: 10 484 dwellings
Before construction: 26 149 dwellings

Brief background

Rust belt action areas (let me shorten them to rusty) are practically brownfield areas with special benefits. The owner of the site or the developer should initiate the process (with specific development plans) and there is a Committee to examine if the proposed site is entitled for the rusty status. Based on the opinion of the Committee, the final decision is made by the government. The decisions (about the exact sites) are announced in a decree and the special benefits coming with it are:

  • priority investment status, meaning e.g. faster permitting procedures2,
  • newly built homes can be sold at 5% VAT without limitation in time3,
  • this 5% can be reclaimed by the buyers4.

By the current regulations, it means a min. 5% and a max. 27% price advantage over competitors developing on non-rusty area until 2030 (depending on when the permit was obtained) and a 27% price advantage from 2031 on.

Our focus

What we do is to turn the mentioned decree into information we need for forecasting. With the help of Eltinga Building Permit Monitor database and the iBuild project information database, actual projects are identified from the lot numbers specified in the decree. Among all the general project specifics, the number of dwellings (where it is known), are attached to these projects.

The map shows the stages of the housing projects that were given rusty status. Bluish dots are those before construction, neon yellow dots are those under construction and the dot disappears once the project is completed.

OK, it is very convenient to see projects on a map, but our focus is more on the chart under the map where the yellow is the number of homes under construction.

What we are curious about is if and when the right end of the yellow curve shows a strong upturn.

In other words, we are curious whether the regulation ignites a recovery or not. As of now, it is more common that the yellow line has increased because projects having started in the past were given the rusty status. (So they were just re-qualified, it did not mean new project starts.) In parallel, it is less common that projects start after they were given the status. Just two extreme examples for these: Unipark Buda has been under construction since 2019 and it got the rusty status at the end of 2023, while Láng quarter was given the rusty status in 2021 and it is still before construction.

The charts will be updated quarterly, so check back if you are also curious.

Another way we like to look at it is a list. Here we do not separate the projects to phases (like on the map) and it gives a quick understanding on how each rusty project moves ahead from 1 February 2024 on.

Data sources

The data mostly come from Eltinga Building Permit Monitor (in Hungarian: Építési Engedély Figyelő). This is a very detailed database on before construction multi-unit housing projects in Budapest. It is aiming primarily at developers who would like to understand the competition. For further information on this, please turn to Mr Zoltán Sápi, Eltinga, sapiz@eltinga.hu. Besides, we use the iBuild project information database.

  1. This is an estimation based on the median size of those rusty projects where the number of homes were announced ↩︎
  2. 619/2021. (XI. 8.) Korm. rendelet
    a rozsdaövezeti akcióterületek kijelöléséről és egyes akcióterületeken megvalósuló beruházásokra irányadó sajátos követelményekről     ↩︎
  3. 2021/8. Adózási kérdés – A rozsdaövezeti lakások értékesítésének adómértéke ↩︎
  4. Rozsdaövezeti adó-visszatérítési támogatás ↩︎

EECFA 2025 Winter Construction Forecast

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EECFA released its 2025 Winter construction forecast on 12 December. Check out a sample report and place your order on eecfa.com. For discount, please contact us.

Southeast European construction markets

“Bulgaria’s total construction output is forecasted to increase by 3% on average for 2026-2027” – says Yasen Georgiev at Economic Policy Institute (EPI), EECFA’s Bulgarian research institute. He adds that this is to follow estimates for a similar performance of almost 3% in 2025. The sectoral background, however, shows, a nuanced picture – cooling of residential construction, positive news from non-residential and a robust performance of civil engineering. The latter will benefit from investments which will be backed by the absorption of EU funds through the Recovery and Resilience Plan (RRP) and classical operational programmes, both with implementation deadlines in 2026 and 2027. At the same time, Bulgaria’s economy is to expand by 2.4% on average in 2026-2027 – a period continuously shaped also by the Euro adoption on 1 January 2026.

Michael Glazer (SEE Regional Advisors) and Tatjana Halapija (Nada Projekt), EECFA’s Croatian members, think that declining dwelling sales in Croatia have, paradoxically, failed to stop the growth in the value of Croatian residential output, because increases in the price per square meter of those dwellings that do get sold have more than compensated for the lower number of square meters bought. “But how long this can continue is unclear” – they add. “The policies that the Croatian government is implementing in order to ease the country’s housing crisis are confusing the residential picture still more, since a number of those policies have contradictory effects on output. As to non-residential building construction, output growth during the period covered by the current forecast will depend greatly on the sector, with some likely to continue to benefit from catch-up growth and EU support for a bit longer and others moving toward a steady state or even a decline. In civil engineering, EU funds continue to play the dominant role in financing construction of all sorts. Sports facility construction is experiencing a boom, but given the speed with which such projects are completed, the effect on output will be relatively brief. Renewable energy construction should be growing rapidly, but regulators’ hostility toward the sector are holding it back.”

“Romania’s economy is entering a challenging period as the recently implemented measures to reduce the national account deficit begin to take effect” – reports Dr. Sebastian Sipos-Gug, EECFA’s Romanian researcher at Ebuild. “While most forecasters do not anticipate a recession, economic growth is expected to remain subdued over the next two years. Inflation is the highest in the EU, boosted in 2025 by increases in sales taxes. As a result, consumer prices are rising at a pace that is forecasted to outstrip wage growth, leading to a decline in real incomes in both 2025 and 2026. Government spending is also facing cuts, thus both private and public consumption are predicted to decline, with a chilling effect on most construction activity types. There is also the challenge of the massive level of public investment required by civil engineering projects that have started since 2023, which will be difficult to sustain under the austerity and the mounting pressure of losing even more EU funding. On the brighter side, both the economy at large and the labour market are expected to be quite resilient. By 2027, assuming the deficit reaches manageable levels, the effects of contractionary policies should fade out, inflation could ease, and interest rates could come down. This means that demand for construction would rebound and with it, construction activity.”

Dejan Krajinović, EECFA’s Serbian researcher (Beobuild) says that “Serbia’s overall construction output sank into a negative territory in 2025, primarily owing to the weaker performance in civil engineering. This year recorded growth in building construction, but the substantial consolidation in civil engineering dragged totals in red. The completion of major road, railway and energy projects contributed mostly, but delayed construction starts played a role as well. Residential construction is stable and is on historical levels, while non-residential construction is booming led by the hosting of the EXPO 2027 in Belgrade. Investments into commercial, hotel and office buildings are all spurred by the event, with the purposely built EXPO 2027 complex consisting of numerous venues being the single largest investment in non-residential. Improving financial conditions and sustained demand still support relatively high construction activity, but a lot of global political and economic uncertainties are dimming future prospects.”

Dr. Aleš Pustovrh at Bogatin, EECFA Slovenia, says that Slovenia’s construction sector is holding steady at EUR 6bn, though growth has cooled. Residential buildings remain the anchor, with output expected to show only a slight dip in 2025, helped by strong employment, rising wages and cheaper mortgages. Property transactions rebounded in early 2025, reversing last year’s slump, while prices continue to climb amid land shortages and slow permitting. Public housing programmes are ambitious, but private developers are concentrating on Ljubljana and coastal towns. Non-residential construction is mixed: offices are recovering slowly, retail stays subdued, but industrial and warehousing thrive on export demand and automation while health and education remain at very high levels. Civil engineering and public works lean on EU-backed projects and are anticipated to reach historically high levels by 2026. 

Eastern European construction markets

Andrey Vakulenko at Macon, EECFA’s Russian research institute notes that “the high key rate and the overall economic slowdown are constraining the Russian construction industry with negative trends expected for the current year and over the next two years. An easing of monetary policy, which has already begun, could help normalize the situation, but a positive effect is not expected until 2027. The main drag on construction output will likely be the residential subsector where high rates and revised government demand support principles are reducing activity among both buyers and developers. Negative trends will also likely persist in most non-residential segments due to declining growth rates of budget financing, a general decrease in business activity and a slowdown in consumption. The overall descending dynamics in the construction market may somewhat be mitigated by stable growth in civil engineering driven by export projects in energy and transport, but this growth is not predicted to be enough to keep the construction market in a positive zone”.

Prof. Ali Türel, EECFA’s Turkish researcher, reports that “the major effect of inflation-curb policies in Türkiye is the decline in disposable income and in the purchasing power of wage earners and pensioners. The moderate to lower-income population is unlikely to save enough equity for buying a home when rents have also become unaffordable for many. Ironically, housing sales have been increasing at a much higher rate than the growth of households. This can be attributed to the typical trend in Türkiye, where, during inflation, people expect a higher real return on their financial assets from real estate investments compared to alternative investment options. The reconstruction of earthquake-damaged buildings and infrastructure also contributed to the high rate of growth in building starts and completions from Q2 2025 onward, leading to the highest rates of change in the construction sector’s contribution to GDP compared to other sectors. Our latest forecast indicates that total construction output in Türkiye may reach 6.4 trillion TL in 2027 (EUR 180 billion), all at 2024 prices.”

According to Prof. Sergii Zapototskyi of Uvecon, EECFA Ukraine, despite the war and high risks, Ukraine’s construction industry remains one of the key drivers of economic recovery in 2025. The RDNA4 (the latest Rapid Damage and Needs Assessment Report) estimates Ukraine’s reconstruction needs for the next decade to be USD 486-524 billion, creating long-term demand for residential, non-residential and civil engineering construction works. Major challenges persist, including the uncertainty regarding the duration of the war, especially in frontline regions, labour shortages, bureaucratic barriers in the urban planning legislation, and logistical constraints due to the relocation of production facilities, and often, shortages in building materials. At the same time, the industry is demonstrating resilience: developers are diversifying supply chains, stabilizing procurement schedules, and increasing activity in the Central and Western regions. Demand for housing, intensive infrastructure restoration, and international investment from the EBRD, EIB, and other partners continue to support positive dynamics. The sector’s development prospects for 2026-2027 will largely depend on the security situation and the effectiveness of state recovery programs.

Q3 2025 Permit-Completion in EECFA area

Posted on by janosgaspar

The viz was updated on 29 November 2025 and it is great to see the recoveries here and there.
The text will be updated as soon as we have all the permit data (Ukraine Q3 is missing now).

When it comes to permits, Croatia and Serbia are still very stable. Both countries experienced massive expansion between 2014 and 2022 and they have remained close to their peak every since. Croatia has had around 4 million, while Serbia has had above 7 million permitted m2 for three years. Q2 in Slovenia was not soo good, so it remained well below the peak reached in 2022. Bulgaria is also below its latest peak, but permit data of the latest 3 quarters depict a growing optimism. In Romania the mild recovery is ongoing, led by the residential submarket. Hungary also turned upward, also because of the residential permits. The non-residential submarket looks very bad. Permits have fallen back to the level experienced in 2015.

You may use the dropdown in the viz for selecting either the residential or the non-residential submarket, or both.

See the full viz: EECFA Permit-Completion Quarterly – 29 November 2025

In the full visualization, not only permit but completion data can be followed (where available). Just click on the Country-by-country sheet.

Led by the residential submarket, Türkiye bounced back and up. And due to changing accounting method, all permit time series from 2010 have been revised. From Q2 2025 on, permits issued by authorities other than the municipalities are also reported by TUIK. So the scope is bigger, the results show the full picture. Click through the below viz for understanding the size and the impact of this revision. Mild optimism prevails in Ukraine, the permitted floor area keeps expanding. Since the beginning of this year the residential submarket drives this growth. Russia is stable when it comes to completion of buildings. Non-residential has been edging up, residential has been edging down lately.

Housing needs of internally displaced persons in Ukraine

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Written by Sergii Zapototskyi – UVECON, EECFA Ukraine

The full-scale invasion of Russia caused a deep humanitarian crisis and exacerbated socio-economic disparities in Ukraine. One of the key challenges is to provide homes for internally displaced persons (IDPs). The mass movement of the population created a shortage of affordable and temporary housing as the infrastructure was not ready for such a load. The government is already working on a new housing policy, which might also help resolve the issue of housing for IDPs.

Source: https://www.ioc.gov.ua/analytics/dashboard-vpo

Statistics on internally displaced persons

As of 1 November, this year, 4,588,045 internally displaced persons were officially registered in Ukraine, including 838,436 children under the age of 18 [1]. Most IDPS are in Kharkiv region (508 thousand or 11%), followed by Dnipropetrovsk region (467 thousand or 10%), the city of Kyiv (430 thousand or 9.4%) and Kyiv region (232 thousand or 5%). [3]. IDPs in these regions total about 1.6 million people [1]. As per the result of the 16th round of the survey conducted by The International Organization for Migration (IOM, UN Migration), as of April 2024, about 2.7 million internally displaced people were from frontline areas.

Housing damages, needs and solutions

In total, more than 1.3 million Ukrainian households lost their homes because of the war, including not only IDPs, but also residents of settlements that suffered extensive destruction. The World Bank estimates total housing needs in Ukraine between 2025 and 2035 to be USD 86 billion, mostly to finance repair and reconstruction works of the housing stock (estimated at USD 75.5 billion including the cost of clearing rubble at USD 5.7 billion). USD 404.6 million should go to acute housing needs and funding has also been identified for organizational measures (USD 37.5 million) and regulatory and technical processes, including the development of strategies (USD 12.5 million) to coordinate and implement reconstruction programs [4].

Citizens have already submitted over 850,000 reports of housing damage through the Diia app (the national public-services portal) totalling over 60 million sqm of losses. For comparison, in the pre-war period, an average of 9-10 million sqm of homes were completed in Ukraine each year, demonstrating the scale of challenge and need for multi-level solutions in housing policy. Preferential lending programs are unable to solve this situation and cover the housing needs. The ‘jeOselia’ program provided loans worth over UAH 28 billion, but 52% of this went to military personnel, while IDPs received only 566 pieces of loans. In 2024, within the framework of this 3% mortgage program, only 500 families were provided with housing. The situation is even more critical in the rental market as the state program for subsidizing rental housing has shown low efficiency. The majority of IDPs (90-95%) rent homes unofficially, making them vulnerable to unreliable living conditions and unjustified rental charge increases or evictions.

Modular settlement, Borodianka. Photo: Sergii Zapototskyi

Modular settlements are a key temporary housing for IDPs, although living conditions here cannot be considered fully comfortable. Initially, they were meant to be short-term but gradually became long-term housing for many families due to their limited finances. Today, besides the psychological difficulties and discomfort of residents, operating such facilities is also a major challenge. The maintenance of modular settlements, including payment for utilities, repairs and security, falls entirely on local budgets, an additional financial burden for communities which often do not have enough resources to sustainably finance these.

Modular settlement, Bucha. Photo: Sergii Zapototskyi

Housing policy changes

As the problem of providing housing for IDPs is systemic in nature and cannot be solved solely through financial instruments, a comprehensive review of state housing policy has become necessary, particularly the development of an affordable rental housing segment, social programs, and long-term support mechanisms for both IDPs and vulnerable categories of the population in general.

The Ukrainian Parliament is already working on several key legislative initiatives. The central one is draft law No. 12377 ‘On the Basic Principles of Housing Policy’ to replace the current Housing Code from 1983 which does not contain basic concepts for modern housing policy such as social rental housing or housing stock of communal ownership. Draft law No. 4080 is also important on the inventory of the housing stock. In parallel with drafting these laws, necessary by-laws are being prepared to regulate the practical mechanisms for implementing housing policy (creation and maintenance of housing queues, criteria for selecting recipients of state support, and the procedure of providing various forms of housing assistance). In addition, the government’s plans until 2027 include allocating EUR 650 million to the eRecovery Program, EUR 450 million to support IDPs, military personnel and the families of the deceased, creating a social housing fund and introducing a unified state online system for the long-term strategy of social integration and support for vulnerable categories of the population. All this might help resolve housing for IDPs.

Sources:

  1. Internally Displaced Persons. State Enterprise “Information and Computing Center of the Ministry of Social Policy, Family and Unity of Ukraine”: https://www.ioc.gov.ua/analytics/dashboard-vpo
  2. Housing crisis in Ukraine: how to provide IDPs with housing in 2025? International Renaissance Foundation: https://www.irf.ua/zhytlova-kryza-v-ukrayini-yak-zabezpechyty-vpo-zhytlom-u-2025-roczi/
  3. Internal Displacement Report, IOM Ukraine: https://dtm.iom.int/sites/g/files/tmzbdl1461/files/reports/IOM_UKR_GPS_Internal%20Displacement%20Report_Round%2016_UA_June%202024.pdf
  4. Rapid Assessment of Damage and Recovery Needs RDNA4, World Bank Group: https://documents1.worldbank.org/curated/en/099052925103531065/pdf/P180174-93c8e8c1-83a2-487d-aaec-a8435f9db418.pdf  
  5. Cedos, Housing and Residential Conditions in Ukraine: Survey Results, 2024: https://cedos.org.ua/wp-content/uploads/zhytlo-ta-zhytlovi-umovy-ukrayin_ok_rezultaty-opytuvannya.pdf

More on the Ukrainian housing market and forecast for the segment, as well as the rest of the construction market will be in our Winter Forecast Report Ukraine to be out on 12 December, along with our other 7 country reports. To obtain it and check a sample report: https://eecfa.com/

EECFA 2025 Summer Construction Forecast

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EECFA released its 2025 Summer construction forecast on 23 June. See a sample report and place your order on eecfa.com. To get discounts, you may contact us.

Southeast European construction markets up to 2027

According to Yasen Georgiev at Economic Policy Institute (EPI), EECFA’s Bulgarian research institute, total construction output in Bulgaria is anticipated to grow by 3% on average for 2025-2027 with a stronger growth in the middle of the period when the absorption of operational programmes and the implementation of the Recovery and Resilience Plan are to gain momentum. According to the sectoral breakdown, residential construction is expected to be the subsector with the weakest performance, while non-residential construction and particularly civil engineering are predicted to see stronger growth figures. Against this backdrop, the country’s economy is set to register a slower-than-expected growth in 2025 and 2026. In parallel, it is awaited to benefit from the effects from the full Schengen area membership effective from the beginning of 2025 and from the euro adoption expected on 1 January 2026.

Michael Glazer (SEE Regional Advisors) and Tatjana Halapija (Nada Projekt), EECFA’s Croatian members think that Croatia’s construction as a whole continues vibrant due to the combination of continuing transitioning-economy catch-up growth and large inflows of EU money. Both are beginning to diminish, however, and that will affect all construction segments, some more strongly and more quickly than others. In building construction several sectors have seen the end or are close to seeing the end of catch-up growth. Others, particularly those that benefit most from EU finance, are still going strong. Civil engineering continues to profit greatly from EU funding, and because of the poor initial condition of Croatia’s infrastructure after independence, much catch-up construction remains to be done. Certain government policies will have a great influence on specific building and civil engineering sectors. Those policies include the housing policies embodied in Croatia’s new National Housing Policy Plan until 2030, the new tax on real estate and the country’s renewable energy permitting and electrical grid hook-up fee rules.

‘Romania’s macroeconomic outlook remains positive, but more reserved as the political instability and fiscal uncertainty have done little to improve growth opportunities’ – says Dr. Sebastian Sipos-Gug, EECFA’s Romanian researcher at Ebuild. At the same time, he adds, the country has the largest government deficit in the EU, which will dampen public investment capabilities. All these will make it harder to finance public works and could negatively impact civil engineering. This is doubly worrying as this subsector countered the decline in other construction segments in 2024, and thus the outlook for total construction remains negative in 2025 and 2026 in real terms. Not all is gloom and doom, however. As inflation and interest rates come down, and employment indicators remain strong, private consumption could boost demand for residential and non-residential construction.

‘In 2025 Serbia’s construction is making new gains in building construction, while civil engineering has entered a period of consolidation after the strong expansion during 2023 and 2024′ – believes Dejan Krajinović, EECFA’s Serbian researcher at Beobuild. Building construction is supported by both public and private investments, boosted by the hosting of the EXPO 2027 in Belgrade. Non-residential construction is the main beneficiary of this event, particularly commercial, office and hotel segments, while residential construction is also keeping historically high volumes. Some delays are seen in civil engineering, but the overall performance is still strong with a long list of planned projects in all major subsegments. Domestic demand is still relatively strong, but economic growth and the level of investments are being muffled this year by uncertainties in the global markets, particularly the weak EU economy, international trade issues and the ongoing wars in Ukraine and the Middle East.

‘Total construction output in Slovenia is expected to decrease from the historic high of EUR 5,5 billion reached in 2023. In both 2024 and 2025, it could contract but remain above EUR 5 billion annually’ – as per the opinion of Dr. Aleš Pustovrh at Bogatin, EECFA’s Slovenian member institute. He predicts the sector to return to growth in 2026 and 2027, mostly on the back of a healthy growth in residential construction buoyed by decreasing mortgage rates. On the other hand, civil engineering is prognosticated to shrink significantly in 2024 and 2025 due to some large projects nearing completion, like the new railroad connecting Port Koper. Both non-residential and civil engineering depend to a large degree on public financing that was widely available in the post-Covid period but will become much less available in 2025-2027. Especially if the overall economic activity continues to slow down. This deceleration and more foreign labourers have also caused lower construction cost growth, but other challenges persist such as the additional bureaucratic burdens (changed permitting process, increase in tax, ongoing discussion on changes to short-term rental legislation, among others) and many external risks in the global economic and political environment. 

Eastern European construction markets up to 2027

‘In the forecast horizon, the construction sector of Russia will be under pressure from a range of macroeconomic factors, the main one being the high key rate, which will negatively affect the pace and volume of construction projects’ – according to Andrey Vakulenko at MACON, EECFA’s Russian research institute. The tight monetary policy and the reduced availability of mortgages will likely slow down housing construction, on the one hand. On the other, the high cost of project financing, the general cooling of the economy as well as reduced consumption and business activity will likely shrink the volume of investment in non-residential construction. However, these trends can partly be offset by high volumes of government financing of priority infrastructure and energy projects, which can support civil engineering and ensure near-zero growth in total construction market in 2025-2027.

Prof. Ali Türel, EECFA’s Turkish researcher says that Türkiye has been trying to control high inflation by raising the base rate and managing exchange rate increases through market instruments by the Central Bank and maintaining wage growth at zero or negative rates. This created financing difficulties for industries and businesses, reduced demand for basic consumer goods, and led to affordability problems for mortgage credits. Big declines in building starts and completions in Q1 2025 may also be related to these measures. Yet, the Central Bank’s inflation target for 2025 remains high at 24%. Positive real changes in housing prices relative to building construction costs encourage house building, while their negative real change compared to inflation may be the leading factor in the increase of home sales through equity financing when mortgage credits are not affordable for most households. Rebuilding the quake-damaged 870 thousand units requires about EUR 100 billion and these expenditures have been the primary factor of the large national deficits in recent years.

‘This year, in spite of the continuing war and the economic instability in the country, Ukraine’s construction industry shows signs of recovery and growth on the back of successful programs financing both the construction of new facilities and the reconstruction and restoration of infrastructure in eastern and southern regions’ – according to Prof. Sergii Zapototskyi at Uvecon, EECFA Ukraine. The World Bank estimates that reconstruction would require USD 486 billion. On the negative side for the sector are bureaucratic barriers in the urban planning legislation, shortage of workers caused by mobilization, shortage and high cost of building materials, and logistical difficulties. On the positive side for the sector is demand for housing and the need to restore damaged infrastructure. The near-term future of the industry depends on the level of security, the effectiveness of restoration programs and the volume of international investments.

BCG tanulmány: 2035-re megnő a kereslet az energiahatékony építőanyagokra

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A Boston Consulting Group (BCG) idén februárban publikált egy tanulmányt a tavaly felülvizsgált EU-s EPBD irányelv apropójából, amelyben az energiahatékony anyagok és technológiák iránti jövőbeli keresletet modellezte. A tanulmány szerzői: Johannes Blauhuth, Lorenzo Fantini, Martin Feth, Jannik Leiendecker, és Alberto Pizcueta. Kőrösi Péter (ELTINGA) összefoglalója.

Klímasemleges új épületek az EU-ban 2030-tól

A klímavédelem célkeresztjébe került a legnagyobb energiafogyasztó Európában: az építőipar.  Európa szén-dioxid-kibocsátásának több mint egyharmadáért az épületek felelősek, ami összefügg azzal, hogy energiahatékonyságuk átlagosan igen alacsony. Emiatt az épületállomány dekarbonizációja középtávú uniós irány – már rövid távon is érzékelhető célkitűzésekkel.

Az Európai Unió célja a fosszilis tüzelőanyagok fokozatos kivezetése és a megújuló energiaforrások elterjedésének felgyorsítása, ezért tavaly májusban felülvizsgálták az épületek energiahatékonyságáról szóló irányelvet (Energy Performance of Buildings Directive – EPBD). Az új irányelv előírja, hogy a 2030-as évek elejére az épületállomány legrosszabbul teljesítő elemeit fel kell újítani, 2035-re pedig a lakóépületek energiafogyasztását 20–22%-kal kell csökkenteni. Továbbá 2028-tól minden új középületnek, 2030-tól pedig minden egyes új épületnek zéró kibocsátásúnak kell lennie.

A tagállamoknak 2026 májusáig kell átültetniük az irányelvet a nemzeti jogrendbe.

A BCG előrejelzése az energiahatékony építési technikák és anyagok iránti keresletre

Az új irányelv várhatóan már a következő negyedévekben hatással lesz az európai építőipar működésére. Bár a nemzeti szabályozás kidolgozása némi időt vehet igénybe, az első lépések már befolyásolhatják a befektetői döntéseket és a közbeszerzési szabályokat, különösen a középületek és az energetikai felújítások esetében.

Ha az EU-s célok teljes mértékben teljesülnek, jelentős felújítási hullámra számíthatunk és a zöld építkezés is fellendülhet. A BCG előrejelzése szerint a modern szigetelőanyagok és a nagy hatékonyságú ablakok iránti kereslet évi körülbelül 10%-kal, míg a hőszivattyúk és napelemek iránti kereslet évi 6-8%-kal bővülhet.

A lenti ábra a keresletet modellezi az EPBD-célok teljes megvalósulása esetén, mely 2035-re 70 milliárd eurós piaci volument jelent Németországban és 415 milliárd eurós piaci volument az EU-ban.

Az EPBD célkitűzéseihez időben alkalmazkodó vállalatok előnyre tehetnek szert versenytársaikkal szemben az egyre szigorúbb energiaszabványok és a fenntartható építési trendek környezetében.

Forrás: Boston Consulting Group (BCG), White paper: The building sector and EPBD – Demand impications for energy-efficient materials and technologies, February 2025 by Johannes Blauhuth, Lorenzo Fantini, Martin Feth, Jannik Leiendecker, and Alberto Pizcueta.

Összefoglaló: Kőrösi Péter (ELTINGA)

Bucharest’s drop in residential permit and completion

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Written by Dr. Sebastian Sipos-Gug – Ebuild srl, EECFA Romania

Reading the recent blog post regarding permit and completion data one can see that the trend for residential permits in Romania seems to have taken a downturn since 2021, and this naturally raises the questions: What has happened? Has the market peaked or is it just a temporary setback?

The supply-side story

In order to attempt answering these questions, Dr. Sebastian Sipos-Gug, EECFA’s researcher on Romania, started by looking at permit data for a longer period and split by regions. The slowdown in 2023 and 2024 was present in most regions, but none of them was hit as hard as Bucharest where the useful area in residential permits nearly halved in 2024 compared to the peak of 2022. Thus, whatever effect led to the drop in permits, it disproportionately affected Bucharest.  While it remains by far the most active region, the drop is oversized when adjusted for its share of the market.

In case of Bucharest, a non-trivial amount of this effect could be explained by the gridlock in the urban planning area, with permits for all types of construction hindered by the cancellation in 2022 of the existing zoning plans which have yet to be replaced by newer versions. This makes it more difficult to gain permits for new developments, and could be, at least partly responsible, for the observed shrinkage in residential permits in the last two years.  

Figure 1: Useful area in residential permits, 2015-2024, Bucharest-Ilfov chart presented outside the map due to relative market size (Source: own calculations based on NSI data)

The next logical step seemed to be looking at other indicators such as completions and seeing what happened there. Indeed, they have also been on the decline with the number of completed homes country-wide in 2024 being comparable to that of 2018. Again, Bucharest-Ilfov saw a much larger drop in 2024 over the 2021 figures, standing at –33% compared to –12% in the rest of the country. 

Figure 2: Home completions between 2015-2024 (Source: own calculations based on NSI data)

The decline is quite apparent in the supply of new housing overall, but that the situation is much more dire in Bucharest.

The demand-side story

Could the decrease in supply be a response to lower demand? After all, if developers have difficulties selling stock, they are unlikely to start new projects.

Looking at the number of transactions, they indeed declined overall in 2024 compared to the peak of 2021, but the effect was much smaller with just around 10% fewer properties being sold in the whole country, while in the Bucharest-Ilfov region there was barely any change (-0.3%).

At the same time, prices of homes continued growing, but this time Bucharest (+20%) lagged behind the country (+27%), meaning that the price gap between the capital and the rest of the country is slowly closing.

Figure 3: Number of real estate transactions between 2017 and 2024 (Source: own calculations based on ANCPI data)

However, when comparing the growth in home prices to that of the rise in construction costs, the situation looks more dire. As of 2024, residential construction costs grew 41% over the 2021 level, far outpacing the increase in prices. This was partly due to increased materials costs (+32%), but also due to much higher labor costs (+60%) for construction workers. Since in January 2025 tax breaks for construction workers were eliminated and the minimum wage for them grew, it’s unlikely for the situation to improve in the short term, potentially discouraging developers from new investments until prices reach a place where they offset the costs and offer similar margins as before.

What does this mean for housing affordability?

This topic was touched upon last year, in another blogpost, with the conclusion that it is useful to look at affordability from two standpoints: cash buyers and mortgage takers, since increased interest rates can negate the effects of wage growth.

Taking a regional split into account this time, it’s noticeable, and perhaps slightly surprising that homes are more affordable in Bucharest as the wage gap between it and the country average is higher than the residential prices gap.

This took a turn, however, in 2024 as home affordability in Bucharest started to drop, while the national average remained more or less the same. If the previously mentioned issues that limit permitting are not resolved, we can expect this trend to continue in the future as well since a limited supply will mean higher prices.

Another factor that could limit future supply, at a national level, is developer funding. It used to be the case that developers would focus on presales and use very high downpayments in the project phase (up to 90% in some cases) to fund the construction work, without requiring a bank loan.

Since a high-profile scandal regarding a large developer brought this issue into the limelight, confidence in this type of arrangement has declined and buyers are less likely to accept paying high downpayments before construction has even started. Concurrently, there is a bill underway aiming to limit downpayments for unfinished buildings to 10%. Should developers resort to banking loans for their projects, it would make the market more stable but more expensive for them, leading to either lower margins, or higher prices.

Figure 4: Home affordability for cash buyers: sqm in an average 2-room apartment one could afford with average monthly net wage (Source: own calculations based on data from NSI and imobiliare.ro)

When it comes to home affordability for those using a mortgage loan, things are not looking better than they did last year. Inflation has proved to be stickier than expected, and the Central Bank is lowering reference interest rates slowly, meaning mortgages will continue to be relatively expensive in the near future.

While the higher wages in the capital again prove to be an advantage, making homes slightly more affordable than for the average Romanian, this indicator was also on the decline in 2024 for Bucharest, and stable for the rest, shrinking the gap between the two.

Figure 5: Home affordability for mortgage buyers: size of the home (in sqm) one could afford to buy with a mortgage loan, assuming a 25% downpayment, a 30-year term and a debt-to-income ratio of 40% of the average monthly net wage (Source: own calculations based on data from NBR, NSI and imobiliare.ro).

In the context of high energy costs, in 2021 construction costs increased. Since then, the situation has not improved dramatically, and it’s unlikely to change in the near future as inflation and high wage growth will keep an upwards pressure on them in 2025 as well.

Bucharest is doubly feeling the pain when it comes to new residential development. Adding to high construction costs, there are issues with urban zoning and permits approvals. The supply constraints mean higher prices, leading to slightly declining home affordability, especially for those relying on mortgages.

Figure 6: Construction costs for residential buildings (Source: own calculations based on data from NSI)

Forecast for the Romanian residential market is available in the EECFA Forecast Report. EECFA conducts research on the construction markets of 8 Eastern-European countries, including Romania. Contact us for orders and sample report

EECFA 2024 Winter Construction Forecast

Posted on by efalucskai

EECFA released its 2024 Winter construction forecast on 16 December. Check out a sample report and purchase any of the 8 reports or the package of 8 reports at eecfa.com. For discounts, contact us.

Southeast European construction markets

Total construction output in Bulgaria is forecasted to grow by an average of 3.3% in 2024-2026, which is slightly above real GDP growth projections for the same period. The subsector breakdown shows that residential construction is expected to lose momentum, but this is likely to be compensated by a more dynamic performance of non-residential construction and civil engineering. In parallel, general economic activity in Bulgaria in the forecast period is to be influenced by the effects from the full membership in the Schengen area from 2025 onward and the prospects for the country to introduce the euro on 1 January 2026.

Croatian building construction presents a varied picture across subsectors, with anticipated output growth ranging from significantly positive to somewhat negative. Civil engineering is more uniformly positive, but certain sectors show the effects of the completion and commencement of large projects. Both building and civil engineering output growth will be strongly influenced by new government laws and regulations, the consequences of which, while likely to be large, are difficult to predict for both the short and medium terms. These include the new National Housing Policy Plan until 2030, the new tax on real estate and measures to balance the playing field between different types of tourism accommodations.

Despite the rise in investment, Romania will likely continue to see a stifled growth in construction in real terms due to costs remaining high. Stubborn inflation and the slightly disappointing macroeconomic performance combined with increased wages and still high interest rates create a less appealing environment for investors in building construction. On the bright side, high income and importsare indicative of strong demand for consumption and could translate to demand for construction. While infrastructure did well, the current political turmoil and uncertainty could hobble performance going forwards. Even assuming deficit remains high but stable, as the EC expects, it would continue to raise public debt and make financing further projects more politically difficult. As some downside factors could improve by then, construction growth is forecasted to return to positive in 2026.

Serbia’s construction is likely to have closed another strong year led by civil engineering, but non-residential also entered a new growth cycle with positive outlook boosted by public investments and the hosting of the EXPO 2027 in Belgrade. The construction of commercial, office and hotel buildings are all set to grow in the coming period, followed by education and health. Residential construction is already on historically high levels with a relatively stable performance. In civil engineering, road and railway construction continues unabated, breaking new record volumes on the way, but other segments also have an impressive project pipeline. The economy is set to expand by 4% in 2024 and 2025 on the back of strong consumption and high investment, so construction outputs may sustain formidable levels up to 2026.

Slovenia’s construction sector is expected to maintain post-pandemic levels with annual output consistently exceeding EUR 5 billion up to 2026 against the EUR 3 billion pre-pandemic. Public financing has been a key driver with national budget expenditure up from EUR 10 billion in 2019 to over EUR 15 billion in 2024, though there will be spending limits in 2025-2026. Civil engineering in the forecast period will be supported by major infrastructure projects. Residential construction is set to drop slightly first in 2024 before rebounding by 2026 driven by lower mortgage rates. Non-residential construction is forecast to grow steadily but remain dependant on the availability of public financing. Other challenges remain such as labour shortages, permit backlogs and high costs, but construction cost growth is set to stabilize at under 3% annually.

Eastern European construction markets

In 2024, the Russian construction industry fared better than previously expected driven by the high pace of project implementation and the massive budget support in civil engineering and non-residential construction. It could even offset the negative impacts of the decline in housing construction caused by the end of the mass preferential mortgage program. However, this positive momentum is expected to gradually fade owing to the tight monetary policy of the Central Bank and several other internal and external factors that are slowing down the economy in general and the construction industry in particular. In 2025-2026, the record budget expenditures planned within the framework of new national projects and other measures of state financing will likely maintain construction market volumes in Russia in the positive territory, but with minimal growth.

In Türkiye, increased interest rates and the Central Bank’s policy to reduce the depreciation of the national currency to curb inflation has not yet produced the intended outcomes. And high interest rates are blamed for shrinking industrial output and decelerated trade growth. The interest rate and the Central Bank’s policies had two major effects on the construction sector: big negative real rates of change in construction costs and housing prices. Housing sales are growing as real prices drop and rely on equity financing since mortgage loans have become unaffordable at high interest rates. Building permits in most segments decreased in Q3 2024, while completions had a positive trend. The government’s legal obligation to rebuild the earthquake-damaged 350 thousand buildings with 870 thousand independent units has been the main factor in huge budget deficits that impede the Government from providing sufficient funds for civil engineering projects.

As a consequence of the war ongoing for over 1000 days, Ukraine’s construction market is facing economic difficulties, limited resources, huge losses in buildings, hike in building material prices, lack of skilled workers and limited access to financing, topped with the unpredictability of government decisions and the instability of property rights. The destroyed homes of more than 1.5 million families create a huge demand. Non-residential construction also focuses on the restoration of destroyed buildings and the construction of new ones in safer central and western regions. Civil engineering is also boosted by the renovation of bridges, roads, railways, pipelines, communication and power lines. The ‘Unified portfolio of public investment projects’ recently approved by the government includes 750 big reconstruction projects on roughly UAH 2.36 trillion, while the state budget also has UAH 256.1 billion for public projects in 2025. First, the EUR 50 billion under the EU’s Ukraine Facility are to be used. Financing is also planned through international financial organizations and foreign governments. The priority is energy, transport, utility and public buildings such as schools.

Life after the preferential mortgage scheme in Russia

Posted on by efalucskai

Written by Andrey Vakulenko – MACON, EECFA Russia

The biggest preferential mortgage scheme in the history of Russia, a temporary response to the pandemic in 2020, lasted much longer than planned. The market got accustomed to relatively low rates, prices rose sharply, and mortgages became the main tool for purchasing homes. However, external conditions changed dramatically in the meantime, and this summer the program was phased out. Housing demand immediately collapsed, and the main question now is whether the market will be able to find balance, or the current problems are just the beginning of a major crisis.

The saga of the preferential mortgage scheme

Even though the Russian housing market developed well in the pre-pandemic period, in 2020 the pandemic (lockdown, decline in the economy and in the population’s income) threatened the construction industry. Hence the state program to subsidize mortgage rates. Such programs existed before but only targeted certain groups (e.g. families with children). The new scheme in 2020 was large-scale with no restriction on the type of buyer and was to support demand and ensure stability in the housing market that is one of the key construction segments in Russia.

But good intentions soon turned into problems. The impact of preferential mortgages on demand was disproportionately big: buyer activity soared against the backdrop of a relatively short lockdown and a more-favorable-than-initially-expected dynamics of the economy during the pandemic. Increased demand led to a surge in the cost per square meter. Many investors took out mortgages to make money on rapidly rising prices. Initial savings on loan interest at the start of the program were quickly exhausted due to growing prices. Eventually, the preferential mortgage program, designed to support the solvency of home buyers, reached the exact opposite: it sharply reduced the availability of new homes for them, so much so that it is now at its lowest level of the last 15 years. Another key problem was the excessive length of the scheme. It was kept in the post-pandemic period and extended several times, continuing to stimulate demand and price growth (although conditions were revised to be stringent). So, the market became dependent on state participation and ensured affordable mortgage rates for all types of buyers.

By early 2024, the preferential mortgage scheme started to show side effects such as structural market imbalances (secondary housing became significantly cheaper than primary housing as the secondary market did not have such support), increased indebtedness of the population, and the risk of a primary housing market bubble. The drawbacks of the scheme gradually began to outweigh its benefits. However, either the continuation or the abrupt phase-out of the program would have damaged the market. Yet, external conditions have become extremely difficult, and rising inflation has contributed to a sharp tightening of monetary policy. The key rate of the Central Bank of Russia has increased from 7.5% to 19% since last summer and is now at historical highs. At the start of the scheme in 2020, market mortgage rates were at 8%–9%, and the state subsidized them to 6.5%. In 2024, mortgage rates on average grew to 20%-21%, while the program allowed borrowing at 8%. Because of this, government spending on subsidizing mortgage rates under the scheme soared, and its final cancellation was only a matter of time.

What is happening now

The large-scale preferential mortgage program, officially phased out on 1 July 2024, was the most massive demand support in the history of the Russian housing market: 1.6 million loans were issued for a total of about RUB 6 trillion. Now state support for housing has become more targeted through the introduction of other mortgage programs:

  • Family Mortgage Scheme for families with children
  • IT Mortgage Scheme for employees of IT companies
  • Rural Mortgage Scheme for homes located in rural areas
  • Far Eastern Mortgage Scheme in the eastern and Arctic regions of Russia.

These, however, due to their narrower audience and stricter conditions, will not be able to fully compensate for the cancellation of the preferential mortgage program. The record high key rate makes general market rates effectively prohibitive. In monetary terms, the number of issued mortgage loans in July 2024 dived by 55% over June 2024. The volume of accumulated debt on mortgage loans this July decreased for the first time since 2019. The number of transactions in the primary market (in construction projects) sank by 51% this July against this June and continued to decline this August by another 13%.

Despite reduced demand, there is very high developer activity which has been breaking records for 7 months in a row. At the beginning of September 2024, about 117 million sqm of multi-unit residential buildings were under construction. And growth in supply amid reduced demand creates risks of market oversupply in the future.

What happens next

The end of the preferential mortgage program was planned to take place in a period of low market mortgage rates, but the gap between market rates and preferential rates had been growing steadily and reached record levels this year. Thus, due to the cancellation of preferential mortgages, demand in the market crumpled. It is aggravated by the expected continuation of a tight monetary policy, at least throughout 2025. The projected level of the key rate for this period is 14%-16%, so market mortgage rates will remain high in 2025, exerting strong downward pressure on demand.

Since the mortgage loan became the main instrument for home purchases during the scheme, demand could only be activated if we returned to those rates. The targeted mortgage programs mentioned above partly do so, but they will not be able to fully replace the large-scale preferential one. The most significant, though, Family Mortgage, was extended this July until 2030 with some restrictions: the program now applies mainly to families with a child under 6 years of age (and two other smaller groups of the population[1]). The number of families with children under 6 as per the latest census (2020) was about 7.1 million, but the number of potential borrowers until 2030 will plummet owing to the deceleration in birth rates (an average decline of 4% per year over the past 5 years) and the limitation of the program itself (it can only be used once).

Therefore, demand in the housing market does not have any clear prerequisites for growth in the coming years, and the volume of unsold supply will likely accumulate. Yet, existing schemes might develop, and new ones might be launched, which one way or another might support buyer activity and the entire residential market:

  • New targeted mortgage programs might be introduced based on professional or geographic criteria (public sector employees, representatives of professions valuable to the state, scarcely populated areas, etc). They will not carry the risks of market overheating or bubble since they exclude the purchase of homes for investment. But with high key rates, any such program requires huge state funding, so their introduction in 2024-2025 is unlikely. 
  • New payment schemes might be launched. The popularity of tranche mortgages[2] and various instalment programs is growing, and savings schemes are also being discussed (banks might introduce special target mortgage deposits on which buyers could accumulate funds for home purchases with partial co-financing from federal or regional authorities).
  • The flexibility of mortgage products might grow. Banks are starting to offer borrowers the inclusion of a clause in loan agreements to guarantee a reduction in mortgage rates when the key rate falls. That is, if the key rate drops in the duration of the agreement, the bank reduces the mortgage rate without having to conclude a new agreement.

Direct discounts or a major reduction in the cost per square meter are unlikely though since developers are constrained by the highly increased construction costs in 2022-2024 and will not agree to a considerable decrease in prices. Thus, in the coming years we can expect a reduction in new residential projects launched.

Currently, the housing market in Russia, for an indefinite period, is becoming to be dominated by buyers who qualify for one of the targeted mortgage schemes and whose list will be determined by the state. The game-changer might either be a pronounced and long-lasting increase in the population’s income or a drop in the key rate and, accordingly, market rates on mortgage loans, which is unlikely at least in 2024-2025. Therefore, residential construction volumes will likely decrease. A more detailed forecast on the residential market and the entire construction industry of Russia can be found in the current EECFA Forecast Report Russia that can be purchased on our website.

[1] Families with a disabled child and families with two or more children aged 7-17 living in regions with low housing construction activity (35 regions of Russia) or in a small town (with a population of less than 50,000).

[2] The bank issues a mortgage loan to a client for purchasing a home under construction in several parts. The total loan amount is divided into several tranches (the borrower has a minimum loan payment until the new building is put into operation).

The duality of housing affordability in Romania

Posted on by efalucskai

Written by Dr. Sebastian Sipos-Gug – Ebuild srl, EECFA Romania

Brașov, Romania – Photo by Zoltan Rakottyai on unsplash.com

Dr. Sebastian Sipos-Gug, EECFA’s researcher on Romania, visited the affordability of homes several times in the past as an argument for market stability and to counter doomsayers. Last time he did so, however, he wrote that the residential market was approaching a turning point. And last year, despite decelerating growth in average home prices, the hike in interest rates made housing less affordable for those resorting to a mortgage loan. In case of cash buyers, on the other hand, affordability grew to historically high levels.

Change in useful area in home permits issued in 2023 vs 2022 (own calculations based on data from NSI)

While official output data is lagging a couple of years, some indicators are painting a less optimistic picture. For instance, permits for homes dropped massively in 2023 like-for-like (-24%) and real-estate transactions also declined (-10%). Decline in the useful area in permits for residential buildings seems to be a national issue since only a handful of counties saw an increase in the useful area permitted, while the usual drivers of growth (Bucharest, Center and West regions) were in the red. This does not mean construction will necessarily decline since the permits issued in 2021 and 2022 were at historically high levels, but it does put a cap on the growth potential of the market. EECFA looked at these figures in more detail and provided forecast up to 2025 in the latest EECFA Forecast Report.

Housing affordability: a key indicator of the stability of the residential real estate market

Housing affordability can signal potential issues in the near future such as right before the market crashed in 2008 one could see that prices became disconnected from income, pointing to a speculative market. Decreasing home affordability can also have a negative impact on economic growth as it diminishes the available share of income that can be used for optional purchases.

A commonly used indicator of housing affordability is the time it would take to purchase a 70sqm home with the average monthly gross wage. While this indicator has merits in allowing international comparisons, it is preferable to look at net wages instead as fiscal changes in 2018 (moving tax burden from employers to employees) would have otherwise distorted the indicator by introducing a break in time series.

Home affordability for cash buyers: sqm in an average 2-room apartment one could afford with the average monthly net wage (own calculations based on data from NSI and imobiliare.ro)

Homes were getting more and more affordable for cash buyers as prices grew more slowly than wages in most years from 2009 onwards. However, this simple model fails to explain all of the data. If it were true that more people could afford homes, we should see a surge in purchases. If not enough homes were for sale, prices would rise quickly. Since we are not seeing either, one needs to assume that some other factor is at play here. A potential solution to this conundrum lies in the fact that cash transactions are estimated to account for slightly more than half of all transactions, with the remainder being funded by mortgage loans.

Accounting for mortgage loans, however, requires some assumptions to be made. Namely, purchasing a home with a mortgage loan that has a 25% downpayment, a 30-year loan term, an average interest rate for the respective year and no additional costs and a debt-to-income ratio of 40% of the national average net wage (currently the legal maximum with some exceptions).

This shows the impact that increasing interest rates to combat inflation has had on housing affordability. While in 2021 the average individual could purchase an average home (under the previous assumptions) of 60sqm, by 2023 this had declined to 47sqm, meaning that for borrowers homes are the least affordable in the last decade. 

Home affordability for mortgage buyers: sqm one could afford with mortgage (25% downpayment, 30-year term, 40% debt-to-income ratio of average monthly net wage) (own calculations based on data from NBR, NSI and imobiliare.ro)

What’s in store for the future?

From what we see, the major trends with impact on home affordability are somewhat optimistic:

  • Interest rates are to drop as the National Bank is set to reduce reference rates once inflation comes down. With current national and EC forecasts placing inflation within the target range by 2025-2026, a gradual reduction is expected in the reference rates by then (a positive impact on mortgage affordability).
  • Income growth rate has outperformed the increase in home prices in all but two years since 2008. With a robust labor market and a modest but positive outlook of the economy, wages are set to keep growing in real terms in the near future.
  • Rentals are an increasing alternative to purchasing a home. Traditionally, Romania has one of the highest home ownership rates in the EU (97.7% at the time of the 2011 census), but the recent uptick in rents signals a rise in demand for housing, so this warrants closer monitoring. Depending on the availability of supply, this could mean more transactions or a higher price point since a share of current renters will consider converting to a mortgage, should it be more affordable.
Rent and home price growth rates (own calculations based on data from NSI and imobiliare.ro)
  • Demography is on the decline. The overall population shrank by more than 5.3% between the two censuses of 2021 and 2011, especially in the southern part of Romania (apart from Ilfov). This should, in theory, make housing more affordable, but the demographic decline is most prevalent in less desirable rural areas, so the impact might be minimal.
Demographic changes between the 2011 and 2021 censuses (own calculations based on data from NSI)

If left unchecked, the combination of these two trends (housing is less affordable for mortgage borrowers, but housing affordability for cash buyers is record high), could lead to increased wealth inequality in longer term. For now, they seem to cancel each other out and demand is somewhat mollified. Nonetheless, Romania remains above the EU average in terms of housing affordability, and, assuming no unexpected changes in market dynamics, it is predicted to improve in the near future as inflation and interest rates come down.