Romanian Housing Market before and during the COVID-19 Pandemic

This research aims to study the sustainability of the development of the housing market before and during the Covid-19 pandemic in Romania. In this regard, the evolution of house prices in relation to their market fundamentals was analyzed, and the price-to-income and price-to-rent ratios and the Hodrick-Prescott filter were calculated. The estimated indicators show that since 2016, the residential property market has entered a new phase of expansion of the real estate cycle, but most likely the turning point will be determined by the intensity of the Covid-19 outbreak. Until the moment of the analysis, the data indicate that the pandemic outbreak did have a mildly negative effect on the housing market in Romania, by decreasing households' intention to purchase a home, the number of new home listings and real estate transactions, mainly in the first weeks of the pandemic. The housing prices remained relatively constant during the state of emergency, but after the gradual relaxation, they began to decline slightly in major cities. Due to the uncertainty regarding the future, the long-term impact of the Covid-19 outbreak on the residential market is unknown, but it will certainly depend on the intensity of the pandemic and the measures taken by the authorities to support the economy.