The major impact will be felt in the mass-market segment, where the stock of homes under €120,000 was already limited. However, the medium and premium segments, which were already subject to the standard VAT rate, will be affected by a general rise in construction costs.

"The difference from 9% to 21% is too large for developers to absorb fully without affecting their margins. Currently, price increases can no longer be called speculative; they are dictated by the reality of higher costs for energy, utilities, and construction materials," said Neagu.

The tax changes come against a backdrop of already declining demand in the first seven months of 2025, with transaction volumes in Bucharest 6.8% lower than in the same period in 2024. Despite this, July saw a significant surge in sales as buyers rushed to finalise transactions before the new VAT rate came into effect.

Nationally, apartment sales increased by 16.7% in July 2025 compared to July 2024, with notable gains in major regional hubs such as Cluj (+20.2%), Iași (+27.3%), and Timiș (+15.4%).

Neagu added: "No other year has recorded such a high volume of sales in July as 2025, surpassing even the record-setting years of 2021 and 2022."

In the rental market, an estimated increase of over 10% in Bucharest and other major cities by the end of the year reflects both cost pressures and shifts in consumer behaviour.