In the first half of 2024, the average price of apartments in Chișinău reached a historical high of 1370 euros per square meter, taking into account all types of apartments in Chișinău and its suburbs, whether renovated or in a 'white' condition, etc.
Is it worthwhile to buy an apartment now in Chișinău? Is it appropriate to purchase an apartment now, when real estate prices have significantly increased recently? I believe this is one of the hottest topics on the internet and beyond. In this article, I will try to address some elements about the real estate market to shed some light on this subject.
Why Are Apartment Prices Rising in Chișinău?
The constant increase in prices is primarily dictated by constant demand—Chișinău is the only city in Moldova that has a developed infrastructure (for better or worse) and such a large population. It is here that most educational institutions are concentrated as well as jobs that pay above the country's average salary. That is why every citizen from the regions chooses Chișinău as their first option for internal migration.
When you read this article—do a simple exercise—if you are not from Chișinău—remember the street from your hometown—your neighbors—your friends when you were younger. Where are they now? Where have they moved to live? Let me guess. To Chișinău! Or even if they have moved abroad, they surely have bought an apartment in Chișinău, either to return home someday or just to invest the hard-earned money.
Factors Contributing to the Rise in Apartment Prices in Chișinău:
- Human and Financial Capital Concentration: A constant flow of financial and human capital from the regions and the diaspora is moving towards Chișinău, increasing the demand for housing.
- Locative Preferences: People want to improve their living conditions—they sell old apartments and buy in new buildings, children separate from their parents earlier—they want to be more independent and need separate housing.
Impact of Real Estate Prices on Buyers:
The market dynamics affect different categories of buyers differently:
- Current Owners: Those who already own apartments in Chișinău benefit from the increase in real estate value. These individuals are happy to have become richer.
- New Buyers: People who do not yet own a home are the most affected by the rising prices. Their perception is that apartments are currently expensive.
- Investors: This category of the real estate market adapts more easily to market fluctuations, they are accustomed to the risk and the possibility of both significant gains and losses (remember what happened after 2008).
The Future of the Real Estate Market in Chișinău:
The history of the real estate market teaches us that prices tend to rise in the long term. The buyers' perception is the same regardless of the period considered—in 2018, when the average price of an apartment was 635 euros per square meter (the buyers' perception was the same as now—apartments are expensive), even though now in 2024 we have an average market price twice as high—1370 euros per square meter.
However, if we analyze macroeconomic data, we can make certain conclusions. The affordability indicator to purchase a 60m2 apartment in Chișinău relative to the average salary is quite good. In 2024, it takes savings equal to about 9.6 years of the average monthly salary to purchase a 60m2 apartment. In 2018, it required the average salary for about 10 years, and in 2007, to purchase a similar apartment, it required the average salary for a period of 34 years.
So, the question arises. When was it cheaper, then or now? When was more effort required, then or now?
This does not mean that we should buy any apartment without thorough analysis right now. Prices might still decrease. Furthermore, there could be a price correction in the near future, especially as new projects enter the market. For this reason, you must be very careful and analyze very well what to invest in.
In the long term - real estate always appreciates at least at the rate of inflation (on average, in Moldova, the annual inflation rate is 5-7% per year - in 2022 we had an inflation of approximately 35%).
Conclusion:
The real estate market is complex—it is influenced by numerous internal and external economic and social factors. It is so complex that it is very difficult to make a very precise forecast of where it will head.
Investing in an apartment in Chișinău in 2024 is a decision worth considering, despite rising prices. As the capital of Moldova continues to develop and attract investments, real estate properties not only retain their value but are very likely to increase in value. Those who invest now might look back in years and consider that they made a wise choice. Just see how things have evolved in Romania since 2004—as it approached the EU.
Is it opportune to buy an apartment in Chișinău in 2024? Share the article and write a comment.
Author: Victor Cernomorcenco, Real Estate Specialist at Acces Imobil.
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