The US Commerce Department reported that the median price for a new home sold in September was €217,100, a drop of 9.7 percent from September 2005.
It was the lowest median price for a new home since September 2004 and the sharpest year-over-year decline since December 1970.
The weakness in new home prices was even sharper than a 2.5 percent fall in the price of existing homes last month, which had been the biggest drop on record.
In just two months real estate prices in general have fallen around 13% across the nation and the trend continues, with some markets being hit harder than others.
Across the ocean and a continent a different story all together is being told. Rather then being at it's decline, the Romanian real estate market, and that in particular of it's capitol city Bucharest is in it's major upswing.
Real estate investors looking for continued profit opportunities are coming to Romania. The best means to investing, according to many, is in "off-plans" or presale condos are they are reffered to more commonly in some parts.
An incredible seminar organized by respected Colliers International in Romania entitled "Portofoliul imobiliar-o noua afacere" or "Real Estate Portfolio - a new business" presented research that shows just how profitable investing in off plan developments in Bucharest can be.
The average profit, according to Colliers consultant Ilinca Paun, from the time of conception of an apartment complex on paper (when it is first offered as an off plan opportunity) to it's realization is 30-40%. After realization such apartments tend to rise in price an additional 40-50%.
The initial profit is explained because the developer has a minimal profit target during the early stages and the continuing increase in demand for the apartments likewise increases the prices. In addition, the cost of construction tends to rise of the course of the development.
For example, in the residential apartment complex "Central Park," which was launched as on off-plan in May 2005 the price of a three room, 123 sm2 apartment was 124.700 Euro. In May 2006 the price had already reached 186.700 Euro. Paun commented that these apartments have a potential rent of 1500 Euro per month.
"It's in the interest of the investor to acquire the apartment at any early stage, one year from the realization of the project, because the rise in price will be at least 20% said Atena Tiplic, representative of sales and rentals for Colliers.
Tipid believes it's likely that a noticeable raise in the price in rent for new luxury developments is to be expected in 2007 as Romania joins the EU and more multinational companies move in.
In present, in Bucharest there are between 5,000 and 10,000 potential clients for such new apartment projects.
Most of those who purchased the 1,800 new apartments made available in the Bucharest market until now were between 30 and 40 years old.
Colliers noted that the prices for apartments in older buildings will begin to enter in a trend of price decline.
* all quotes are paraphrases that are translated from Romania and do not constitute an official translations
This article is based on the article :
"Investitiile in apartamente noi in Bucuresti aduc beneficii de pana la 14%"
