After several years of record demand, Romania’s residential market entered 2025 in a cooling phase, marked by increasingly cautious buyer sentiment. Consumer confidence recorded the steepest half-yearly decline since the 2009 – 2010 crisis, with the exception of the temporary shock caused by the pandemic, when optimism quickly rebounded. This time, however, Colliers consultants point out that the deterioration runs deeper and is expected to last longer, fuelled by a slowdown in the labour market, political instability and fiscal changes eroding purchasing power – all of which will be reflected in the residential market over the coming period.
In the early months of the year, political uncertainty and debates around raising VAT on new homes created market volatility, with a weak start followed by a temporary rebound in spring. The increase in VAT to 21%, effective from 1 August 2025, prompted many buyers to accelerate contract signings, making July one of the most active months in recent years. Still, this surge in transactions is seen as a temporary effect, and Colliers consultants expect that once the new fiscal measures – including higher VAT, increased fuel excise duties and rising energy costs – take full effect, coupled with persistently high interest rates, residential market activity will slow visibly in the final part of the year.
At national level, the property market recorded nearly 106,000 transactions with individual units in the first eight months of 2025, broadly in line with the same period of 2024, according to data from the National Agency for Cadastre and Real Estate Publicity.
“Although construction indicators, building permits and buyer sentiment all show significant declines, the market is not entering a recession comparable to 2009–2010. Rather, we are witnessing a normalisation after several exceptionally strong years in which demand consistently outpaced supply. Over the long term, the fundamentals remain solid: major cities continue to face overcrowding and a housing deficit, while purchase intentions remain well above pre-pandemic levels. These developments suggest the residential market is undergoing a period of adjustment, not a structural downturn”, explains Gabriel Blăniță, Associate Director | Valuation & Advisory Services atl Colliers Romania.
On the pricing side, pressures remain visible, especially in the major cities. Although housing deliveries fell by around 5% in the first half of 2025 compared with the previous year, the demand-supply imbalance is felt most acutely in central and well-positioned areas, where apartments have seen the sharpest price increases. Rising construction costs, driven by higher material prices and new fiscal measures affecting the sector, are keeping the upward trend in place, with an average increase of around 5% in large cities. By contrast, in peripheral or metropolitan areas, where developers benefit from greater flexibility and more affordable land, price dynamics are more moderate and supply remains resilient.
In the short term, the residential market will feel the combined effects of high interest rates, the VAT increase and weakening purchasing power, leading to more selective demand and lower transactional activity. After a long growth period, the labour market also entered an adjustment phase starting in the second quarter, with July marking the fourth consecutive month of job losses in Romania.
Nonetheless, the long-term outlook remains positive: Bucharest and Romania’s major urban centres are still undersupplied compared to other European countries, households continue to face overcrowding, and purchase intentions remain significantly higher than in the pre-pandemic period. As Colliers consultants conclude, the current adjustments are more of a market realignment than the onset of a crisis, especially since leading international institutions – the IMF and the World Bank – do not forecast an economic correction comparable to 2009 – 2010.
