According to Regatta, real estate consultancy company, price of the new housing units in Romania are expected to increase by 10% to 15% this year, reflecting mainly increasing prices of construction materials, which have increased by 7.5% in the 1H2007. This was translated in EUR 100/sqm increase in the final price. Construction materials are expected to go up by another 5% until year end. Another factor that is pushing final prices up is lack of workers on the Romanian construction labor market, which is estimated to some 150,000.
Our view:
We see this news in-line with previous indications about construction costs, that are driving prices of new dwellings up across whole CEE and SEE region. Majority of the developers have fixed contracts with general construction for ongoing projects, therefore we see this rather neutral from short term, however in the mid-term increasing prices could have adverse impact on the demand as the monthly average wage in Romania allows to buy only some 0.30-0.35 sqm, which is below average in Poland or Czech Republic, where the figure stand around 0.40 sqm.