In a still volatile macroeconomic context, with estimates showing single-digit inflation over the next 12 months, but up from previous forecasts (8.21% in July versus 7.73% in May) and economic growth in 2023 of 2.5% in July versus 3.2% in the first quarter, the total elimination of the 5% VAT rate for apartment purchases will have a significant impact on the residential market in Romania, believes Mauricio Mesa Gomez, General Director of Cordia Romania and Spain . 
Romanians have shifted to a greater extent in the last year and a half towards renting apartments and have postponed the decision to buy, amid the unstable macroeconomic and geopolitical situation in 2022, and the trend continued in 2023. Throughout this period, rental prices have risen significantly amid high demand, and the elimination of the reduced 5% VAT rate for apartment purchases and the switch to a single quota of 19% VAT will put upward pressure on sales prices, further discouraging purchases and pushing potential customers even more towards postponing their purchase decision and renting instead. Obviously, all this increased demand in the rental segment, directly driven by the elimination of the reduced 5% VAT rate for apartment purchases, will have a knock-on effect and will put more pressure on rental prices,” explains Mauricio Mesa Gomez.
Apartment rents increased between July 2022 and July 2023 by between 8% in Timisoara and 22% in Constanta. In Bucharest, the highest rent increase of 11.7% was recorded for two-room apartments.
“The total elimination of the reduced 5% VAT rate for apartment purchases will strengthen the preference of buyers, both end-users and portfolio investors, for two-room apartments, especially as rents for this type of housing have increased and are likely to continue to increase. In fact, in the last year and a half we have seen, at Parcului20, the 485-apartment project completed by Cordia in Expoziției area in northern Bucharest, an increase in sales of two-bedroom apartments to investors who buy them to rent them out, thus protecting their money from the effects of inflation,” concludes Mauricio Mesa Gomez.
Sources: CFA. Imobiliare