Europe’s Housing Disconnect: Phantom Inflation Hits Europe

Europe’s Housing Market: Romania in a Healthier Position

The European housing market has experienced rapid price growth, and in many Western cities, such as Berlin, Paris, Barcelona, and Amsterdam, housing costs have risen beyond what local incomes can sustain. Analysts often describe this as “phantom inflation”, where prices increase faster than wages and economic fundamentals.

In this context, Romania, particularly Bucharest and Brasov, stands out as a healthier market. While property prices have grown steadily, they remain more affordable compared to Western European capitals, and the market is largely driven by local demand rather than speculative investment.

How Romania Differs from Western Europe

• Lower absolute prices: Apartments in Bucharest or Brasov typically range from 2,000 to 3,500 €/m², which is far below the prices in Paris or Berlin.
• Predominantly local buyers: The Romanian market is less speculative and more tied to real household incomes.
• Better alignment with wages: Although prices have risen, the ratio between property cost and local income remains more sustainable than in many Western cities.

Sustainable Growth in Romania

Phantom inflation is more prominent in Western Europe, fueled by foreign investment and speculation. In Romania, price growth is guided by real demand and credit availability, making the market more stable and resistant to sudden corrections.

Opportunities for Buyers

For buyers in Bucharest and Brasov, the current market offers significant advantages:

• Properties remain relatively accessible compared to Western European cities
• Long-term value growth is more sustainable
• Emerging neighbourhoods provide investment opportunities with real potential

Conclusion

While Western European cities are experiencing extreme price growth and affordability challenges, Romania’s real estate market remains healthy, offering reasonable prices and stronger ties to local economic fundamentals. For informed buyers, Bucharest and Brasov present real opportunities for homeownership and investment with lower risk than the highly inflated Western markets.