Key Macroeconomic Forces Behind Rising Real Estate Prices

Apartment prices have increased significantly in the municipality of Chisinau, both in the city and in the suburbs. Often, in public discussions, there is speculation about the reasons for this increase, and often the blame is placed exclusively on real estate agents. However, this simplistic explanation does not reflect the complex reality of the market.

To truly understand price dynamics, we must analyze not only the direct characteristics of the properties (area, type of building, subdivision, surface area, floor, etc.), but also understand the macroeconomic factors that influence overall prices, from outside the market. Only with a complete perspective can we correctly explain the evolution of prices and discuss solutions for a more balanced market.

Increasing population incomes

As salaries and household incomes increase, more and more people can afford to buy homes. This influx of buyers increases demand and, implicitly, prices.

Inflation and the fall in the value of money

When inflation is high, people seek to protect their savings by investing in safe assets, such as real estate. This increases demand and, automatically, prices.

Access to mortgages

Reducing interest rates and facilitating access to mortgages (through programs such as Prima Casă) has led to a significant increase in demand in the market, putting additional pressure on prices.

Urban migration and demography

Internal migration, with people moving from rural areas to cities, along with the growth of the urban population, has increased the demand for housing in large cities. As the population from rural areas or from other countries moves to Chisinau, the demand for housing increases rapidly, often exceeding supply.

Land availability

In large cities, land suitable for construction is becoming increasingly scarce. This scarcity increases the value of land and, implicitly, of the buildings built on it.

Construction costs

Increasing prices for construction materials, labor, and energy are directly reflected in the final prices of new homes.

Foreign investments

The inflow of capital from foreign investors or the diaspora generates additional demand, which contributes to price increases, especially in the premium segment.

Urban regulations

The lack of building permits, along with the absence of a clear vision of urban development, makes it difficult for new projects to emerge. Thus, the supply of housing remains limited, even as demand increases, which inevitably leads to price increases.

Geopolitical situation

Political and geopolitical stability play a key role. Events such as the war in Ukraine impact local real estate markets through refugee flows, blocked or redirected investments, and changes in risk perception.

Investment Alternatives

In the absence of developed financial markets, such as local stock exchanges or investment funds, many investors are turning almost exclusively to the real estate market, generating additional pressure on prices.

Conclusion
To understand why real estate prices are constantly increasing, it is essential to look not only at the specific factors of each apartment or project, but also at the broader economic, social and geopolitical context. Only through an integrated approach can sustainable solutions be identified to balance the real estate market in the long term.

Author: Victor Cernomorcenco, Real Estate Specialist at Acces Imobil.

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