Antena 3 CNN Business It could happen again. Strong warning from Mugur Isărescu: "Romania, one step away from new real estate bubble

It could happen again. Strong warning from Mugur Isărescu: "Romania, one step away from new real estate bubble

It could happen again. Strong warning from  Mugur Isărescu: "Romania, one step away from new real estate bubble
27 Iun 2014   •   15:58
A new real estate bubble is about to develop  both in Europe and in Romania. Not that investors would have  forgotten  the crisis but  there’s nothing they can do with the  money saved after the banks reduced  deposit interest rates  across Europe. The negative interest rates offered by banks on deposits might cause savers to seek alternatives for placing money in land and housing, said the governor of the National Bank of Romania, Mugur Isarescu quoted by  jurnalul.ro.

"The equation is simple. If the  man who saved up money wants  to have even the smallest interest rate  but real positive now sees himself being  penalized (...) with  negative real interest. And where can he take his savings to? He  places them into  something that gives him the feeling that it will increase in value. But this feeling changes. It growths up to a point and then begins to decrease. What is the point in any speculation? That story with the emperor’s  old clothes ... until one cries  out the king emperor is naked. Then  the perception changes " Isărescu said.

The data show that housing prices in Romania in early 2014 had the fourth largest drop from 45 countries in the world according  to globalpropertyguide.com portal. The collapse of  the real estate in Romania is second only to countries with a complicated economic situation: Russia, Greece or Spain, according to the source. Altogether, newly built homes in major cities in Romania were cheaper by up to half of the peak reached during the housing market in 2008, according to  imobiliare.ro. And the apartments in  old buildings have decreased by  percentages between 32% and 57% in the six main cities in Romania, in all categories, from 2008 up to the present.

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