Struggling Romanian homeownership for average earners revealed in new study
In the heart of Europe, Romania is grappling with a housing affordability crisis, particularly in its major cities like Bucharest and Cluj-Napoca. A recent analysis by Social Monitor, a project of Friedrich-Ebert-Stiftung Romania, reveals that the high demand for housing, combined with limited supply and socio-economic factors, is making homeownership increasingly difficult for many Romanian residents.
Factors Contributing to the Housing Crisis
The housing crisis in Romania can be attributed to several key factors. Rapid urban population growth and demand, coupled with housing supply constraints, are driving prices up in Bucharest and Cluj-Napoca. The construction rate and supply of affordable housing have not kept pace with demand, and bureaucratic hurdles, slow permitting processes, and restricted financing limit new developments and expansion of affordable housing stock.
Economic conditions and labor market issues also play a significant role. Although Romania has made progress in labor markets, employment levels remain low compared to OECD standards, and wages are still below many Western European countries. This wage gap limits residents’ purchasing power for homeownership, especially in expensive urban markets like Bucharest and Cluj-Napoca.
Rising Property Prices and Incomes
Property prices in these Romanian cities have increased faster than average incomes, making mortgages and down payments less affordable for a large share of the population. According to the analysis, in Bucharest, a resident needs 2.7 monthly salaries to buy one square meter of residential space in the city center, while in Cluj-Napoca, the figure is 3 monthly salaries. Outside these cities, a resident needs 1.5 monthly salaries to buy one square meter of residential space outside Bucharest and 2.2 monthly salaries outside Cluj-Napoca.
The Impact on Romanian Residents
The high cost of living in Romania, as compared to income, makes it challenging for Romanians to afford housing. This is further exacerbated by the high cost of living, which puts a lot of strain on the budgets of Romanians. On average, Romanians spend approximately 31.3% of their income on food and clothing, compared to under 20% in Western Europe and about 24% in Bulgaria.
Comparison with Other European Cities
Although the cost-to-income ratio in major Romanian cities may appear similar to other European cities, the overall cost of living in Romania is higher compared to income. For instance, in Berlin, Amsterdam, or Sofia, a square meter costs approximately 2.4 monthly salaries, which is significantly lower compared to Romanian cities.
EU-wide Housing Challenges and Plans
The European Commission recognizes the widespread housing crisis and plans to introduce an affordable housing strategy by spring 2026 aimed at tackling issues such as bureaucracy, construction, financing, and social housing support across member states. This strategy could potentially provide relief to Romanian cities facing a housing affordability crisis.
In conclusion, the housing crisis in major Romanian cities is a complex issue, rooted in increased housing demand, insufficient affordable supply due to regulatory and economic constraints, and wage inadequacies relative to property costs. These challenges are more acute in Romania than in many Western European cities, where labor markets and social supports tend to be stronger and housing markets often better regulated or supported.
- Businesses focused on affordable housing development in Romania might face several challenges, including slow permitting processes, bureaucratic hurdles, and restricted financing, which limit new developments and the expansion of affordable housing stock.
- The high demand for housing, coupled with rising property prices and incomes, has made mortgages and down payments less affordable for many Romanian residents, resulting in a housing affordability crisis in major cities like Bucharest and Cluj-Napoca.
