31bn euros from Romanians' wealth quickly wiped by the crisis

The real estate price drop and the rapid loan increase have erased 123bn RON (31bn euros) from Romanians’ net wealth in 2008, according to a NBR report. Practically, a Bucharest inhabitant owning a three-room apartment in Drumul Taberei, which became 40-50% cheaper between the start of 2008 and 2009, from 120,000 euros to 60,000-70,000 euros, has lost around 50,000 euros. Considering he or she also took out loans, his or her wealth has shrunk significantly in net terms, show NBR data. “In NBR’s data, non-financial assets, namely the apartments where Romanians live, account for a really significant share. It is because of the falling real estate prices that we have a decrease from the previous year,” comments Rozalia Pal, chief-economist with UniCredit Tiriac Bank. The net wealth drop practically means a lower capacity for consumer spending, explains Pal. All these declines are reflected in the population’s net wealth, which decreased by almost 31bn euros last year, to 265bn euros, amid the dramatic correction on the real estate market, which severely reduced the value of owned properties. The value of real estate assets held by the population fell by 12% in RON, to 828bn RON (208bn euros).