Chisinau has the lowest apartment prices among the capitals of Central and Eastern Europe.

In recent years, apartment prices in Chisinau have increased significantly. For many residents of the capital, this development fueled the perception that housing has become too expensive and increasingly difficult to afford.

However, a comparative analysis of the main capitals in Central and Eastern Europe shows an interesting reality: Chisinau remains the most affordable capital in the region in terms of price per square meter.

Apartment price ranking

In order to better understand the positioning of Chisinau in a regional context, we analyzed the level of housing prices in several European capitals. The data show significant differences between the markets, and the average price of apartments in the analyzed capitals is as follows:

• Vienna – €7,770/m²
• Prague – €6,126/m²
• Warsaw – €3,876/m²
• Bratislava – €3,845/m²
• Budapest – €3,061/m²
• Sofia – €2,300/m²
• Bucharest – €2,250/m²
• Chisinau – 1,720 €/m² (according to the Property Index Acces Immobil)

To make the comparison more relevant from the perspective of an average buyer, we calculated the estimated cost of an apartment with an area of approximately 52 m² in each of the analyzed capitals. The results highlight important differences between the markets as follows:

• Vienna – €404,000
• Prague – €319,000
• Warsaw – €202,000
• Bratislava – €200,000
• Budapest – €159,000
• Sofia – €120,000
• Bucharest – €117,000
• Chisinau – €89,440

The differences are impressive. A similar apartment costs more than four times more in Vienna than in Chisinau and more than three times more in Prague. Compared to the other capitals, Chisinau is:

• 77.9% cheaper than Vienna;
• 71.9% cheaper than Prague;
• 55.6% cheaper than Warsaw;
• 55.3% cheaper than Bratislava;
• 43.8% cheaper than Budapest;
• 25.2% cheaper than Sofia;
• 23.6% cheaper than Bucharest.

At first glance, the conclusion seems obvious: Chisinau is one of the most affordable residential markets in Europe. But the price per square meter tells only part of the story.

How much salary is needed to buy an apartment?

Another relevant indicator of housing affordability is the number of average monthly salaries required to purchase a standard 52m2 apartment. The lower this indicator is, the more affordable housing is for the population. In the analyzed capitals, the situation is as follows:"

• Sofia – 80 monthly salaries
• Bucharest – 98 monthly salaries
• Chisinau – 112 monthly salaries
• Warsaw – 112 monthly salaries
• Budapest – 114 monthly salaries
• Vienna – 122 monthly salaries
• Bratislava – 133 monthly salaries
• Prague – 160 monthly salaries

Although Chisinau has the lowest prices in the region, housing affordability is not much better than in Bucharest and is even lower than in Sofia.

In other words, the main problem of the residential market in the Republic of Moldova is not only the price level, but the ratio between housing prices and the income of the population.

Why does this difference exist?

Real estate prices are influenced by numerous factors, and their evolution cannot be explained only by the ratio between demand and supply. Among the most important factors are:

• salary level;
• the cost of mortgage loans;
• population migration to the capital;
• foreign investments;
• costs of building materials;
• availability of land for development;
• the demand for new housing.

In recent years, construction costs have increased throughout Europe, and Chisinau was no exception. At the same time, the supply of well-located land is limited and the demand for modern housing remains high.

These elements pushed prices up, even if the incomes of the population did not increase at the same rate.

Is Chisinau an undervalued market?

If we strictly analyze the price level, Chisinau is significantly below the capitals in the region. The difference compared to Bucharest is approximately 24%, and compared to Budapest it exceeds 40%.

The history of the last two decades shows that cities that have experienced economic development, investment and significant wage increases have also seen consistent increases in property values.

Warsaw, Prague, Bratislava and Bucharest are clear examples of this.

To the extent that the economy of the Republic of Moldova will continue to develop, and the incomes of the population will increase, it is possible that the real estate market in Chisinau will gradually reduce the difference compared to the other capitals in the region.

Conclusion

Chisinau remains the most affordable capital in Central and Eastern Europe in terms of price per square meter. An apartment here costs 24% to 78% less than in the other capitals analyzed.

However, when we analyze the ratio of housing prices to population incomes, we notice that affordability is closer to that in other countries than a simple price comparison suggests.

For buyers, this means that choosing a home should be analyzed in terms of both price and financing capacity.

For investors, the current difference between Chisinau and the other capitals of the region may represent one of the most important arguments regarding the market's development potential in the coming years.

Chisinau is today the cheapest capital in the region. The question that remains is whether it will continue to be so in 10 years.

Author: 

Victor Cernomorcenco, Real Estate Specialist at Acces Imobil.

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