The first article in the series: Banks Aren’t Really Banks
They’re served the Moldovan real estate market, the National Bank’s RPPI index (residential property price index), a mortgage portfolio, inflation, the base rate, and bank collateral.
Ten minutes in, it’s clear: this is going to be a long breakfast. This isn’t just a debate over the index’s methodology—it’s, in essence, an autopsy. And the patient still considers itself perfectly healthy.
The mistake isn’t that they calculate the index. The mistake is that they present it as something it isn’t.
The NBM is perfectly entitled to calculate an asking-price index—it’s a legitimate, interesting, and useful statistic. The problem begins when the regulator presents this index as if it were the actual growth of the real estate market. And that, excuse me, are two completely different worlds.
The asking price is what the seller wants to receive.
The transaction price is what the buyer is actually able to pay.
Between these two figures today lies not just a typical negotiation, but literally the whole truth about the Moldovan market: an increasingly impoverished buyer, expensive loans, a falling number of transactions, prolonged market exposure, window-dressing prices—and a banking system that pretends that collateral values are still on solid ground.
There’s no floor there anymore. There’s just plywood laid over a hole—it looks decent until you step on it with your full weight.
An ad isn’t the market. It’s a wish, sometimes even a reasonable one
The National Bank of Moldova (NBM) works directly with asking prices—that is, with listings. Not with the prices of closed deals, not with registered sales, but with what sellers have put out on display. This can be researched. This can be published. But to present this to the public without a single caveat as “rising real estate prices” is simply incorrect.
The market begins where there is a buyer, money, a contract, registration, and the actual exchange. Until that moment, what you’re looking at isn’t a price—it’s a desire. Sometimes a reasonable one. Sometimes an inflated one. Sometimes—it’s simply the seller’s psychological therapy at the expense of someone else’s time and attention.
In an active market, the asking price and the transaction price are more or less in line with each other, and the listing index at least roughly reflects reality. But when deals fall through and sellers continue to cling to expectations from the previous cycle, the listing index ceases to measure the market and begins to measure sheer stubbornness.
It’s not a barometer of the economy. It’s a sign on a closed door that says, “We still believe.”
These are the figures that make this entire methodological claim concrete rather than abstract.
In the fourth quarter of 2025, 999 apartments were sold—78.5% fewer than a year earlier. The market lost nearly four out of every five buyers. At the same time, the average price remains above 1,700 euros per square meter. In everyday language, this is called “prices holding steady.” In the language of financial stability, it’s more accurate to put it this way: “the market has stopped clearing through transactions”—that is, the mechanism that’s supposed to reveal the true price through actual purchases has simply broken down.
The seller is still living in the past cycle. The buyer is already living in a new reality of financial hardship. The bank is living by its collateral table. The National Bank is living by its index. And all four are collectively pretending that they are in the same reality.
One listing, six months, and a 30% difference
Practical experience paints an even harsher picture than the statistics. The property was listed by a major agency for €1,900,000. It was noticed in June. But it had actually been sold at the end of last year—for €1,450,000. For half a year, the market saw a price 30% higher than the actual transaction. For half a year, this figure could easily have found its way into analytics, expectations, appraisal reports, discussions with banks, comparative analyses, and that very “market backdrop” that everyone later refers to.
(Here, by the way, it’s worth recalling a scandal in St. Petersburg from many years ago, when an appraisal company fell prey to corruption and published fake transaction listings itself—simply to remind us that such stories have already happened, and not just in theory.)
And here’s the question—not for the real estate agent, but for the regulator: how many bank reports during this time were based not on the market, but on a window-dressed facade? How many collateral appraisals landed on the credit committee’s desk with prices that were never verified by an actual transaction? How much capital appears sufficient simply because it’s based on a listing rather than a sale?
This is no longer a matter of statistics. It is a matter of a financial architecture built on a cardboard box.
Even valuation standards agree with this breakfast
International valuation standards are crystal clear on this point. Market value is not the seller’s fantasy, nor is it the asking price in a listing. It is the estimated price of exchange between a willing buyer and a willing seller following normal marketing efforts, in an arm’s-length transaction, without coercion, and with reasonable behavior on the part of the parties.
Listings can be used—but critically: with analysis, adjusted for listing duration, an understanding of how binding the offer actually is, and a mandatory comparison with actual transactions. And certainly not as the sole source of oxygen for the entire valuation system.
European standards (the very ones our government loves to cite) are even stricter: EVS 4 requires that a valuation be supported by sufficient market evidence. Simply using listings without verifying their connection to actual transactions is simply not enough.
And here’s what happens in practice in our country
The country lacks a comprehensive public database of closed transactions. Valuation activities are poorly regulated. Reliable market data is fragmented. Banks want a report. The appraiser looks for comparables. There are few actual transactions. All that’s left are listings.
And at that moment, the National Bank of Moldova (NBM) steps in and tells the market: here’s the index—ask prices are rising.
In other words, the regulator isn’t just observing the “shop window” from the sidelines. It’s putting the government’s stamp of approval on it. As a result, the “shop window” begins to create its own reality.
Then the most dangerous part of the story begins. The seller sets an inflated price. The appraiser sees the market of offers and is forced to base his assessment on it—after all, what else can he base it on if there are no actual transactions? The bank accepts this appraisal as the value of the collateral. A loan is issued based on this value. The transaction—if it does go through using borrowed money—becomes a new benchmark. The next appraisal receives an even higher “comparable.”
This is how the storefront begins to create reality. It’s a classic bubble—except that in the Moldovan version, it doesn’t look like a Hollywood-style Wall Street orgy from the movies, but rather like a quiet office, Excel spreadsheets, printouts, reports, LTV, and the phrase “it’s in line with the market.”
Nothing is actually happening. It’s just that all participants in the chain dutifully pass the same distorted figure back and forth until it starts to look official.
Here’s the entire risk formula: offer price – collateral valuation – loan amount – bank asset – reserves – capital – capital adequacy ratio. If the first link is fictitious or inflated, the entire chain looks solid only on paper.
It’s like building a dam out of press releases—it looks good until the water comes.
Under its mandate, the NBM is required to dampen procyclicality—this is what macroprudential tools, countercyclical buffers, supervision, stress tests, and capital requirements are for. But if the regulator itself uses its own statistics to legitimize asking prices as a signal of market growth, it isn’t putting out the fire. It’s drying firewood next to the stove and then wondering why it smells like smoke.
Mistake number two: credit leverage disguised as income growth
The NBM interprets the expansion of the mortgage portfolio as a healthy process: household incomes are rising, interest in buying real estate is high, and banks are actively lending. It sounds nice—almost like a developer’s promotional brochure, only with the regulator’s coat of arms on the cover.
The numbers tell a different story. The mortgage portfolio grew from 8.3 billion lei at the start of 2021 to 27.4 billion lei by the end of the first quarter of 2026—nearly tripling over five years. At the same time, the average repayment term rose from 220 months in 2023 to 266 months—that’s nearly 22 years.
The NBM itself attributes this to rising real estate prices: buyers are forced to stretch out their payments to reduce their monthly burden. Read that again, slowly. The buyer hasn’t gotten richer. They’ve just been in debt for longer. This isn’t an increase in prosperity—it’s an extension of the debt leash, just phrased in a more palatable way.
If a person cannot buy an apartment on the same payment schedule as before and is forced to stretch out the debt for nearly 22 years, that is not “high interest in real estate.” It is a market that is trying to sell today’s price at the expense of the buyer’s future life. This market generates no income. It is propped up by mortgages, loan terms, government programs, and the hope that tomorrow won’t be any worse—even though Moldova’s entire problem lies precisely in the fact that tomorrow too often turns out to be worse than the rosy forecast.
Prima Casă as a Second-Order Pump
The program increases the purchasing power of a narrow group of buyers, helps some transactions go through, these transactions confirm high price levels, high price levels feed into new appraisals, and new appraisals support new loans. It’s a closed loop—and a rather elegant one, if you ignore what it does to the market.
In a stable economy, this is a social program. In an overheated and illiquid market, it’s a mechanism for propping up a bubble at the expense of the budget. In this configuration, the government does not create housing affordability. It props up prices that have long since become detached from household incomes.
Mistake number three: collateralizing the entire illusion
The larger the mortgage portfolio, the more apartments become part of the banking system as collateral. If the value of this collateral is based on appraisals, and appraisals—in the absence of actual transactions—are based on asking prices, then bank capital begins to depend on window dressing. It’s a simple but unpleasant chain of logic.
It sounds dry, but the point is simple: if tomorrow the market is forced to shift abruptly from listings to actual transactions, the collateral may turn out to be worth less than what is recorded in the bank’s accounting. And then the problem will cease to be a problem for appraisers—it will become a problem for capital, reserves, and financial stability as a whole.
As long as asking prices “save face,” the banking system appears stable. But it is not the market that is saving face. It is the absence of widespread transaction verification that is keeping up appearances—it’s like a person who considers themselves healthy simply because they haven’t had a checkup in a long time. The absence of a diagnosis is not the same as the absence of a disease.
A sharp revaluation is particularly dangerous. If transactional reality breaks through into valuation practice not gradually but all at once, banks will face not a mild correction but a blow to their entire collateral base all at once. Capital adequacy requirements may then necessitate a simultaneous response: building up reserves, reducing risk, selling assets, and tightening lending—and this in itself will exacerbate the decline in liquidity and prices.
The spiral is set in motion not because someone wrote a bad article. It is set in motion because people have long refused to face the real price.
Mistake number four: monetary policy is fighting the wrong kind of inflation
The National Bank of Moldova (NBM) raised the base rate twice in a month and a half: first to 6.5%, then to 7% per annum. Formally, this is a fight against inflation. But we need to look not only at the average figure, but also at the structure of what it hides.
The official annual inflation rate of about 6.8–7% looks almost decent. But beneath this “average temperature” lies a completely different reality: fuel, diesel, gasoline, public transportation, electricity, eggs, vegetables, utilities, and basic living expenses. For Excel, these are index components. For a family, they’re the refrigerator, the minibus, the electricity bill, the commute to work, home repairs, medicine, and the constant, quiet fear of the mortgage payment.
When diesel, gasoline, transportation, and basic food items rise at a rate many times faster than overall inflation, the average figure ceases to reflect the reality of the average borrower’s life. Technically, the index may be absolutely correct. Politically and socially, however, it becomes a smokescreen.
Here’s the nuance: inflation isn’t just “7%.” For a household that spends a significant portion of its income on groceries, transportation, and utilities, the real burden is much higher than that figure. And it is precisely this household that the NBM then considers a participant in the mortgage market, one that is supposedly buying a home thanks to rising incomes. This isn’t analysis. It’s accounting poetry.
If food, fuel, transportation, and energy eat up one’s income, a person does not become a homebuyer. They become a prospective debtor for 22 years.
Raising interest rates in such a situation does not produce more fuel. It does not lower the price of electricity. It does not make vegetables cheaper. It does not increase real incomes. It does not create effective demand for apartments. It does exactly one thing: it makes credit more expensive.
The big picture: a storefront, interest rates, inflation, and empty pockets
The National Bank is doing two things at once: it’s showcasing “market growth” through asking prices while making credit less accessible to actual buyers. In the store window—growth. At the bank—the interest rate. In the store—inflation. For the buyer—empty pockets. And then all of this together is called “macroeconomic stability.”
No. This is a staged, window-display image, beneath which a solvency crisis is methodically building up.
Politically, this setup is extremely convenient—for absolutely everyone.
It’s convenient for the government to hear that real estate prices are rising: it means the economy seems to be alive.
It suits the construction lobby to talk about a supply shortage: that means they need to build more, offer incentives, and streamline procedures.
It suits banks to value collateral at high appraised values: that means their capital looks better.
It’s convenient for sellers to keep prices high: that means they can just wait it out.
The only ones who aren’t happy are the buyers. And reality—but reality, unfortunately, has no lobby.
What do the numbers really say, if we don’t embellish them?
If transactions are falling, the market isn’t growing—it’s stagnating. If asking prices rise while transactions fall, that’s not market strength—it’s the growth of illiquid expectations. If mortgage volumes increase by extending loan terms, that’s not a sign of public wealth—it’s just shifting the pain into the future. If interest rates rise amid cost-push inflation, that’s not a cure for the root cause—it’s a blow to demand. If collateral is valued at face value, banks’ capital may prove sustainable only until the market’s first massive test.
The main question for the NBM—and it’s by no means rhetorical
What exactly are you measuring? If you’re measuring asking prices, then say so: asking prices are rising. If you’re measuring the market, show the transactions. If you’re talking about financial stability—show how collateral will withstand stress not based on announcements, but on actual sales. If you’re talking about income growth—explain why mortgage terms are stretching to nearly 22 years. If you’re talking about 7% inflation—explain to households why their fuel, transportation, electricity, and basic basket of goods follow a completely different set of numbers.
This is precisely where the regulator’s true responsibility begins. The central bank is not the real estate market’s public relations office, nor is it a department tasked with keeping developers in good spirits. It is an institution that must identify risks before they are spotted by a bank teller, a real estate agent, or a family that suddenly realizes their mortgage was only affordable on paper.
Bubbles always look convincing—right up until the moment they burst
All bubbles share one common trait: before they burst, they look very solid. They have charts, press releases, confident language, neat tables, and people in expensive suits who say everything is under control.
Then it usually turns out that they had control over the wording, not over the risk.
The Moldovan real estate market has not entered a phase of healthy growth today, but rather a phase of price denial. Sellers are still holding onto prices from the last cycle. Buyers are already living in a new reality. Banks are accepting collateral based on inertia. Government programs are propping up individual transactions.
And the NBM, with its asking price index, is neatly smoothing over the gap—instead of showing it for what it really is: a threat.
This isn’t just a measurement error. It’s a manipulation of the indicator—institutional window dressing on a market that’s bleeding out through transactions.
The NBM measures the storefront and calls it the market. The market isn’t an ad. A market is a transaction. Before a transaction takes place, the price in an ad is nothing more than the seller’s dream, printed in large font.
And when sellers’ dreams grow, transactions decline, mortgages stretch, interest rates rise, and inflation hits basic expenses—talking about healthy price growth is like rejoicing over a patient’s high fever: the number is big, but it’s no cause for celebration.
The National Bank has confused a storefront with the market, credit leverage with income, average inflation with real life, and collateral value with financial stability.
And if the regulator continues to view the market through the lens of classified ads, the next report may well be not about price growth, but about the cost of its own mistake.
P.S. As usual, none of the above constitutes investment advice. Especially if you’re still basing your decisions on a price listed in an ad from six months ago.
Dumitru Taraburca,
expert in real estate appraisal and development
