The country where 96% of homes are privately owned

“In Romania, we have a super culture for credit” – Bogdan Iancu, lecturer, National University of Political Science and Public Administration Bucharest (Credit: Ioana Moldovan)

Ioana Moldovan “In Romania, we have a super culture for credit” – Bogdan Iancu, lecturer, National University of Political Science and Public Administration Bucharest (Credit: Ioana Moldovan) — “In Romania, we have a super culture for credit” – Bogdan Iancu, lecturer, National University of Political Science and Public Administration Bucharest (Credit: Ioana Moldovan)

Romania ranks first in the world for private home ownership. But that doesn’t mean buying a home is easy, says Ioana Moldovan.

Paying 100,000 Romanian leu ($24,145) for an apartment in 1991 was a fair price at the time (Credit: Ioana Moldovan)

Ioana Moldovan Paying 100,000 Romanian leu ($24,145) for an apartment in 1991 was a fair price at the time (Credit: Ioana Moldovan) — Paying 100,000 Romanian leu ($24,145) for an apartment in 1991 was a fair price at the time (Credit: Ioana Moldovan)

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Romania touts the highest rates of home ownership in world. According to Eurostat data, 96% of Romanians live in owner-occupied dwellings. But government policies, economic shifts, fewer rental opportunities and mounting social pressure to become a homeowner means the experience of owning a home in Romania has been wildly different across generations.

Although Romania wasn’t always a culture of homeowners, the country has given way to a pro-property ownership mentality (Credit: Ioana Moldovan)

Ioana Moldovan Although Romania wasn’t always a culture of homeowners, the country has given way to a pro-property ownership mentality (Credit: Ioana Moldovan) — Although Romania wasn’t always a culture of homeowners, the country has given way to a pro-property ownership mentality (Credit: Ioana Moldovan)

In 1990, at the end of Romanian communist rule, the state owned 70% of apartments, says Bogdan Suditu, urban planning expert and Bucharest University professor. Once the government began to sell these properties, people rushed to buy the homes they were living in – often at very advantageous prices. Romania’s devalued currency, paired with growing inflation, made purchasing easy for these baby boomers.

“Paying 100,000 lei for an apartment in 1991 was a fair price at the time. In 1994, that was the price of a colour TV,” Suditu says.

Not only was housing more affordable, but the Romanian government also built fewer public housing units after 1996. Buying a private property became a more popular option by default.

Carmen Ralea, 66, was among the few Romanians who bought homes in the communist era. She bought her flat in 1979, but only finished paying it off in 2000 (Credit: Ioana Moldovan)

Owning a home comes with advantages, so I even encouraged my children to do so

Carmen Ralea, 66

Although Romania wasn’t always a culture of homeowners, the country has given way to a pro-property ownership mentality.

According to Suditu, there hasn’t been much public demand for an alternative to homeownership. But he also believes the enthusiasm stems from the lack of viable housing alternatives. In some cases people are not informed of these options, either.

“Everybody sells you the idea of property. Your parents do, the banks offer you cheap loans, the real estate developers offer all kinds of solutions. Everybody talks about how to become a homeowner under any circumstances.”

More than a third of Romania’s housing is in disrepair, and highly susceptible to seismic risk – a major problem in the country (Credit: Ioana Moldovan)

Ioana Moldovan More than a third of Romania’s housing is in disrepair, and highly susceptible to seismic risk – a major problem in the country (Credit: Ioana Moldovan) — More than a third of Romania’s housing is in disrepair, and highly susceptible to seismic risk – a major problem in the country (Credit: Ioana Moldovan)

As Generation X reached the home ownership stage, attitudes toward property ownership had not changed within the country – but the Global Financial Crisis had made homeownership more difficult, especially with plunging supply.

Romania established the First Home programme in 2009 on the back of the global economic downturn to help would-be homeowners afford their first property.

“The programme helped revive the real estate market,” says credit broker Dragos Nichifor. “It encouraged developers, but it also gave people access to [favourable] loans, with only 5% advance payment.”

After losing his first apartment in a divorce, Catalin Pomeanu, 48, had to surrender his second property to the bank in 2016 when the loan instalments almost equalled his salary.

Following several bad rental experiences, Pomeanu was able to purchase a house in the countryside, some 60km away from Bucharest. He had used money from the sale of an apartment his parents had bought through the 1990s privatisation programme.

“For me it’s a dream come true,” says Pomeanu. “Not only having the house with a yard, but also having my own home where I can do what I want and what I do is for myself.”

Paying 100,000 lei ($24,145) for an apartment in 1991 was a fair price at the time (Credit: Ioana Moldovan)

Ioana Moldovan Paying 100,000 lei ($24,145) for an apartment in 1991 was a fair price at the time (Credit: Ioana Moldovan) — Paying 100,000 lei ($24,145) for an apartment in 1991 was a fair price at the time (Credit: Ioana Moldovan)

The middle class in Romania was built on credit

Bogdan Iancu, anthropologist and lecturer

In Romania, renting is seen only as a temporary phase (Credit: Ioana Moldovan)

Ioana Moldovan In Romania, renting is seen only as a temporary phase (Credit: Ioana Moldovan) — In Romania, renting is seen only as a temporary phase (Credit: Ioana Moldovan)

Despite declining global homeownership rates for millennials, and the rise of a permanent rental market that is “a thing that feels quite natural in other countries”, according to Iancu, renting is seen only as a temporary phase in Romania.

“There is no well-defined legal frame, no law to regulate the rights and obligations for renting in Romania,” says Dragos Nichifor. “That’s the main reason people want to become homeowners.”

Some developers do not view rental units as a viable business model in new apartment buildings. Rental prices are too low, which means that they won’t make back their money for years. Most landlords in Romania own anywhere from one to three apartments, which Nichifor says are often shabby and have low-quality furniture.

Along with Romania’s lacklustre legal framework for renting properties, which protects property managers more than tenants, renting is rarely a viable option.

In 2015, Razvan Dumitrasconiu’s pregnant wife, Giorgiana Boboutanu, was two weeks away from her due date when their landlord told them that he wanted to sell their rented apartment in Timisoara, and that they would need to vacate. Looking to buy, the couple, now 32 and 31, respectively, turned to the First Home programme.

After being priced out of a three-bedroom flat downtown, they bought in Giroc, a village nearby Timisoara, in a newly built apartment building in the middle of a field.

They did not want to take on a long mortgage, but they will pay off their purchase for the next 30 years. “Credit was the only way,” he says. “We had no alternative.”

Journalist Stefan Pana, 31, would prefer to rent if it were a viable option, but finds the prospect too unstable (Credit: Ioana Moldovan)

Ioana Moldovan Journalist Stefan Pana, 31, would prefer to rent if it were a viable option, but finds the prospect too unstable (Credit: Ioana Moldovan) — Journalist Stefan Pana, 31, would prefer to rent if it were a viable option, but finds the prospect too unstable (Credit: Ioana Moldovan)

“In an ideal world, I would like to be a tenant, if only I would have the certainty I could stay there as long as I wanted to. If, three years ago, I could have rented from a company, I would have done so,” says Stefan Pana, 31, who bought a two-room apartment on the outskirts of Bucharest in 2015.

Panna bought a flat with the share of money he made from selling an inherited apartment. Owning an apartment – even if it was in a remote location – felt like the safest thing to do.

Iulia Baceanu, 30, bought her home with an inheritance – a situation most Romanian millennials are not "lucky" enough to be in, she says (Credit: Ioana Moldovan)

Ioana Moldovan Iulia Baceanu, 30, bought her home with an inheritance – a situation most Romanian millennials are not "lucky" enough to be in, she says (Credit: Ioana Moldovan) — Iulia Baceanu, 30, bought her home with an inheritance – a situation most Romanian millennials are not "lucky" enough to be in, she says (Credit: Ioana Moldovan)

When Iulia Baceanu was 13, she and her cousin inherited a house from their grandmother in her hometown of Ploiesti. They sold the house, and Baceanu set aside the money to help buy her own home someday. When she went to the University of Architecture and Urbanism in Bucharest, she opted to live in a dormitory in order to save money.

Now 30, Baceanu believes she is among the lucky ones, since not everybody has an inheritance to help them buy a home. Looking at her colleagues and friends who have to pay rent, she’s thankful that her costs as a homeowner are far lower and she gets to save some money every month.

Even as the global landscape evolves, Romania remains a country of homeowners. According to a report completed by the World Bank and Romania Regional Development Program, a “virtually absent rental market” contributes directly to overcrowding as multiple generations or extended families live together – even as families expand.

The report also indicates that more than a third of Romania’s housing is also in disrepair, with structural issues, heating problems, and little protection against earthquakes (Romania’s risk is the highest in Europe). Among the reasons for the lack of repairs, many owners cannot afford them.