2.3.4. Home ownership and the house market

2.3.4. Home ownership and the house market

Romania has the highest percentage of population that own their home, 96.4% (see Figure 6). This fact has some unfavourable ramifications as Ciora (2015) mentions: “A higher home ownership is associated with negative effects like: lower labour mobility, longer commutes, and fewer new firms and establishments “ (Ciora, 2015, p.127) According to the National Institute of Statistics, the private rental sector is around 2% of the housing stock but other experts approximate that the real number is around 11-12% of the dwellings (TENLAW 2014). It is believed that this inaccuracy may be caused by those who rent and by the owners, because they do not declare their housing status in order to avoid taxes (TENLAW 2014). Romania`s young adults have a small share of the house stock, which is around 12% (Habitat, 2015). This is in agreement to what was mentioned in section 2.2.3 about the younger generation being disadvantaged in acquiring homes (see section 2.2.3).

Figure 6. Distribution of Population by Tenure, Source: Eurostat (2014)

The price increase for housing may have also accentuated this imbalance between generations. The house prices and the demand highly increased before 2007 EU accession (Eurostat, 2016). After 2009, the economic crisis lowered the property value by 20.62% in the first year but recovered by 2014 (Eurostat, 2016).In the second quarter of 2016 the home prices are rising again by 5,6% (IMF, 2016). It could be possible that the prices will continue to rise as the GDP

is growing (see section 2.3.1). This may accentuate the young adults inability of acquiring new accommodation.

A surprising finding is related to the distribution of population by dwelling type. As mentioned in section 2.2.1, the communist regime aimed to move most people in apartments and they built mainly just blocks of flats (see section 2.2.1). Although they had this programme, in 2014, the population distribution reveals that 54% of Romanians live in detached houses (see Figure 7). This could be linked to the quality of the apartments and to the property restitution that happened after the revolution (see section 2.2.3).

Figure 7. Distribution of population by dwelling type. Source: Eurostat (2014)

It is believed that an element that has slowed the construction industry and housing market, was the steep decrease in population (Habitat, 2015). Between 2004 and 2014, it was down by 7.3% and the main issue has been the migration to other countries but also a low birth-rate (Habitat, 2015). Compared to its neighbours it has the highest rate of depopulation (Habitat, 2015). Further in depth governmental research may clarify this situation and the real numbers of the housing market could result in different policies and actions to manage the affordability for young adults.