House prices will drop by 50%. The warning of a well-known Romanian economist: “The real estate bubble is bigger than in 2008”
Shock in the real estate market. Economist Radu Georgescu, former bank manager, claims that the real estate market in Romania is in a phase of major overvaluation and that house prices will drop by up to 50%.
Romanians could pay 50% less for apartments Photo: Shuterstock
“Housing prices will drop by 50%. I say this from the perspective of a guy who was in the period 2008-2011 financial director at the financial division of General Electric in Romania”wrote the economist Radu Georgescu, in a post published on Facebook.
Georgescu says that he had direct access to the mechanisms of the financial market during the crisis, through his position as financial director at the financial division of General Electric Romania, a company that, according to him, managed during that period “all types of bank loans: mortgage, leasing, cards and consumer loans”.
“During the financial crisis of 2008 I participated in top management meetings at European level. In short, I saw the film of the financial crisis of 2008 from the front row”he said.
“Current bubble is bigger than 2008”
The economist claims that the current imbalances are stronger than in the period preceding the global financial crisis, citing several structural factors in Romania's economy.
“I explain why the real estate bubble now is much bigger than it was in 2008”he begins his analysis.
1. Low wages and high taxes
Radu Georgescu states that Romania has the lowest average net salary in the European Union, according to Eurostat, and claims that this is amplified by the high level of labor taxation. “Romania ranks last in the European Union in average net salary. And not because Romanians work less, but because the state takes 42% of the gross income (CAS, CASS, income tax). Romania has among the highest salary taxes on planet Earth”he claims.
2. High mortgage interest rates in Romania
Another central argument is the cost of mortgage loans, considered significantly higher than in other European states. “Romanians pay the highest mortgage interest rates in Europe”claims Georgescu.
It states that in April 2026 the average interest rate on mortgage loans in Romania is 8.5% APR, while in Bulgaria it is 3.5% APR.
To illustrate the difference, he presents a comparative calculation for a loan of 100,000 euros over 30 years: Romania: total interest approximately 195,000 euros; Bulgaria: total interest approximately 57,000 euros.
“The difference: 138,000 euros — for the same apartment, the same loan, the same number of years. A Romanian pays 3.4 times more interest than a Bulgarianr”, says the economist.
He adds that he has done a detailed simulation in an Excel file on bank rates.
3. Depopulation and unoccupied housing
Georgescu also claims that Romania is the country most affected by depopulation in Europe in the last two decades, according to Eurostat data.
“Romania is the most depopulated country in Europe in the last 20 yearsi”, he says.
At the same time, he claims that approximately 25% of houses in Romania are empty, including in Bucharest, where they are highlighted by the lack of maintenance consumption.
4. Housing accessibility
The economist also refers to an indicator used by the US Federal Reserve, according to which total housing costs should not exceed 30% of net income.
“If the monthly expenses (rate, rent, utilities, etc.) exceed 30% of the net salary, the home is unaffordable”explains Georgescu.
Applying the rule to Romania, with an average net salary of 653 euros, results in an accessibility threshold of approximately 196 euros per month. “I turned on the TV this morning. The news started with strikes all over Romania. The reporters were asking people why they were on strike. They all said the same thing: “We don't have any more money to pay the installments at the bank””writes the economist.
Very high house prices will continue to rise until the end of the year. Where the biggest increases were recorded
Radu Georgescu states that the current increase in real estate prices has been fueled by unrealistic expectations and comparisons with Western European markets.
“This bubble was carefully inflated by real estate agents who for years told clients: “Buy now! Prices in Romania will align with those in Germany and France!”“, he claims.
In his view, these comparisons ignore the major structural differences between the economies:
“In Germany and France average net salaries are 4-5 times higher than in Romania, and mortgage interest rates are 2-3 times lower. But who has time to look at economic data?”, concludes Radu Georgescu.
In just three hours, the post published by Radu Georgescu became viral, exceeding 500,000 views. “This reaction is the confirmation that a large mass of people believe that the current prices of apartments have reached a downright absurd level in Romania”, Georgescu also claims.
Reactions in the online environment: “The truth is somewhere in the middle”
Readers' opinions are divided between supporters and critics of the scenario of a possible drop in house prices by up to 50%.
“Radu Georgescu, whatever you think, I think so too (in theory). I've been watching prices rise for several years and I haven't understood what they're doing wrong. In practice, things are like this: there are many who can't afford it, but there are few who can afford a lot for very many units. There are people you don't even think about who have more than 10 units (and rent them), there are people who have 3-4 units and prefer to keep them unused…”writes a user on Linkedin, who claims that the market is influenced by the concentration of ownership and increasing social inequalities.
Rent is out of control in Spain, a country where hundreds of thousands of Romanians live: in some cities, up to 76% of the salary goes on housing
Other netizens, however, dispute the economist's conclusions and claim that the market cannot be directly compared to the 2008 crisis period.
“Hi Radu. I share the ideas up to a point. 42% taxes are not the highest on planet earth. Regarding real estate, as long as about 70% of transactions are executed without bank loans, I don't see how making it harder to lend would reduce real estate values so dramatically”states another commenter.
Another opinion emphasizes the role of available capital in the market:
“I believe that those who have a lot of cash will appear and will buy enough to keep this expected decline in check. There is a very large mass of millionaires with cash in Romania who could buy twice everything that is on sale. The real estate market is not held up by the middle income population”, support another user.
However, there are also questions regarding how a possible correction would manifest itself: “If the market is going to go into a correction period, how long do you think it will be visible in the trading prices and not just in the announcements?”asks a netizen.
“Decreasing the price of housing by 50% is impossible. The only correct correction will be seen in the interest paid by citizens. Many investors would not even amortize their investment. I'm not sure you are right.” states a skeptical commentator.
On the other hand, there are also voices that support the economist's analysis:
“Finally an economic analyst who tells the truth based on calculations and concrete arguments! Congratulations! I think the same, but everyone tells me I'm wrong”writes one supporter.
At the same time, some users take a middle position, suggesting that the market will gradually adjust: “My guess is that the truth is somewhere in the middle. Those with cash will continue to buy, and those dependent on credit will turn to rent. I don't think that all Romanians should own property”, was another reaction from the online environment.
