Apartment prices in Chisinau seem to be a hot topic in everyday discussions. It is often said that apartments are too expensive and that the housing market is about to crash due to high prices.
But how real is this perception? Is the real estate market in Chisinau really in an imminent crisis, or are we witnessing an exaggerated reaction caused by the negativism of those who have not yet succeeded in purchasing a home?
Let's take a deeper look at the factors driving these prices and whether they are really exaggerated or justified by the current economic context.
The decisive factor that determines the price of apartments in Chisinau
The real estate market in Chisinau is a very specific one given that for more than 20 years we have been witnessing an internal and external migration of human and financial capital that puts pressure on the real estate market in Chisinau.
The city of Chisinau is distinguished by its uniqueness in the Republic of Moldova due to its vast size and well-developed socio-economic infrastructure. Chisinau plays a central role in all areas of economic, political and cultural life. Urban infrastructure includes the most important educational, health and commercial institutions.
The majority of citizens from the districts have/or have had as their objective the procurement of an apartment in Chisinau, either to move to the capital, or procure it for their children who first come to study and then settle here by finding a place much better paid work.
Even though we have a massive migration of our citizens outside the country, and the country's population has decreased over the years, Chisinau is the only city in the Republic of Moldova that constantly registers an increase in the number of inhabitants. Our citizens who go to work abroad invest heavily in apartments in Chisinau, fulfilling their dream of having their own house.
How affordable are apartments in Moldova compared to other European countries?
According to the data provided by numbeo.com, the Republic of Moldova has an average Price Affordability Indicator for purchasing a home compared to other countries both in Europe and the CIS.
The Affordability Indicator is a fundamental indicator to find out how affordable the purchase price of an apartment is in relation to the average income of a family. A lower Affordability indicator indicates better affordability, i.e. a lower effort a family must make to purchase an apartment, expressed in years of average family income.
The data used by the Numbeo.com website to calculate the Accessibility Indicator
According to Numbeo.com, for the Republic of Moldova, the Accessibility Indicator is 11.1 years. The data used by the Numbeo.com website to calculate the Accessibility Indicator for purchasing a home in different countries of the world are as follows:
- Average disposable income of a family: defined as 1.5 average wages in the economy
- Average size of the apartment: 90 sqm
- Average price per square meter
Explanation: a family (husband and wife) who have a monthly income of 1.5 average wages in the economy who want to purchase a 90m2 apartment, need their annual income for a period of 11.1 years without spending a single penny elsewhere.
CONCLUSION
The real estate market in Chisinau continues to be a hotly debated topic, but detailed analysis shows that the high prices are influenced by internal and external migration, as well as the constant growth of Chisinau's population. Compared to other European countries, housing affordability in the Republic of Moldova remains competitive, with an accessibility indicator of 11.1 years, according to data from numbeo.com.
This fact suggests that, although prices are perceived as high, the Republic of Moldova is somewhere in the middle with regard to the Indicator of Affordability of prices for purchasing a home compared to other countries in both Europe and the CIS.
Author: Victor Cernomorcenco, Real Estate Specialist at Acces Imobil.
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