Real estate market to remain frozen unless home prices go down

Home prices have fallen by 40-50% over the last two years, but the city continues to be full of "for sale" ads hanging by the balconies of the blocks of apartments. What are the players on the market saying in their defence? Developers claim they cannot cut prices below the minimal level agreed with banks, which in turn say that they have the best interests of their depositors at heart. At the same time the old apartment owners set their asking price "as they see it on the Internet."

"What more miracles are developers waiting for? Do they still want to sell apartments at 10,000 euros per square metre in Primaverii area as they used to? This won't ever happen again. Only viable projects will keep their prices as they are. Homes built in the middle of a field outside the cities, with no utilities available, will end up being sold brick by brick," says Doru Lionachescu, main partner of Capital Partners investment firm.

Mihai Bogza, chairman of Bancpost, says that banks and developers share a mutual interest, i.e. to sell the project in such conditions as to allow for the repayment of the loan and that there is a certain flexibility, though limited, in negotiations.

"Avoiding losses has become a target under the current circumstances on the market. If you break even, you can consider yourself lucky," says Ionut Dogaru, country manager of Spanish Grupo Lar, developer of the Natura Residence and Serena projects in Bucharest.