North Bucharest Investments: The increase in VAT accelerated real estate transactions at the end of 2023

The increase in VAT accelerated property transactions before the end of 2023, while lower building permits and favourable credit conditions supported demand for existing properties.

Real estate sales had a significant increase in the last month of last year, according to the official data provided on January 15 by the National Agency for Cadastre and Real Estate Advertising (ANCPI).

Bucharest registered a 30 percent increase in sales in December, compared to the previous month. 15,454 transactions were recorded in December, compared to 11,916 transactions in November.

This positive evolution shows us an increased interest in the real estate sector in Bucharest and the confidence of potential clients in the evolution of the capital’s real estate market.

Vlad Musteață, founder of North Bucharest Investments: “We were used to having a calmer period with fewer transactions in December every year. The last month of 2023 was an atypical one. We experienced a remarkable evolution within the company North Bucharest Investments. In December, we recorded a 40 percent increase compared to November, and the Northern area of the Capital was the most active in terms of sales, being dominated by investors purchasing from their own funds. Anticipating the increase in VAT by 4 percentage points, which would add on average more than 5,000 Euros to the costs, many customers were motivated to stop postponing the decision to purchase a property.”

The increase in sales from December 2023 was also significant if we compare it with the official data from December 2022 – and it was 17 percent. In December 2023, 15,454 properties were sold, compared to December 2022, when 13,254 units were bought.

The main factors contributing to this growth include:

• Changing the VAT rate:

The announcement of the increase in VAT for real estate in 2024, from 5 percent to 9 percent, has stimulated potential buyers to complete purchases before the new rate comes into force, helping to boost sales in the fourth quarter of 2023.

• Number of building permits:

A decrease in the number of permits for new constructions was observed, which limited the supply of new properties on the market. This supply restriction has had the effect of increasing demand for existing properties.

• Reduced mortgage rates:

Banks offered lower rates on real estate mortgages, thus making the purchase of real estate more affordable for buyers. This banking policy has facilitated the realization of a greater number of real estate transactions.

Vlad Musteață, founder of North Bucharest Investments: “Looking ahead to 2024, it is expected that these trends will continue to shape the market. The VAT increase may initially temper demand, but in the long term, the limited supply of new construction and favourable credit conditions will continue to stimulate the market. It is very important that developers and investors respond nimbly to these changes, adapting to the ever-evolving demands of buyers.”

The NBI Group registered over 400 real estate transactions in 2023, in new projects in the Northern area of the Capital. In the last year alone, the company’s turnover doubled from 20 million RON to 42 million RON.