Valentin Neagu: “The jump from 9% to 21% cannot be fully absorbed by developers”

On August 1, 2025, the VAT rate for new housing increased from 9% to 21%, a fiscal change with a direct impact on prices and sales strategies in the residential market. According to Valentin Neagu, Managing Director of Crosspoint Real Estate, the impact will be felt most strongly in the mass-market segment, where the stock of homes below the EUR 120,000 threshold was already limited. In contrast, the mid- and premium segments, where the standard rate already applied, will be affected mainly by the general rise in construction costs.

“In major cities, apartments with reduced VAT were becoming increasingly scarce, and in Bucharest only a few established mass-market areas still had a relevant inventory. The jump from 9% to 21% is too great to be fully absorbed by developers without affecting margins. At present, price increases can no longer be labeled speculative; they are dictated by cost realities – more expensive energy, utilities, and construction materials,” explained Valentin Neagu.

The tax changes come against the backdrop of a demand already declining compared to last year. However, this trend is not the result of reduced solvent demand but of a period of uncertainty generated by the economic and political context. In the first seven months of 2025, transaction volumes in Bucharest were 6.8% lower than in the same period in 2024 – a temporary adjustment likely to fade over the next 6–12 months as the market recalibrates. Contributing factors include reduced purchasing power, wage freezes, more difficult access to credit, and limited available supply.

The immediate effect of the VAT hike was seen in July, when buyers rushed to close transactions before the change took effect. According to ANCPI data, apartment sales rose by 16.7% nationwide compared to July 2024, with a 12.7% increase in the Bucharest metropolitan area (+11.1% in the capital and +20.6% in Ilfov). Significant increases were also recorded in major regional centers: Cluj +20.2%, Iași +27.3%, Timiș +15.4%. “No other year has recorded such high July sales volumes as 2025, surpassing even the record years of 2021 and 2022,” emphasized Valentin Neagu.

Over the next 12 months, Crosspoint does not anticipate a sharp decline in the residential market, but rather a moderate adjustment. Limited supply and a slow pace of permits will keep demand relatively high. “In the first six months of 2025, new home prices rose by 10% compared to December 2024, and the trend is far from reversing,” concluded Valentin Neagu.