Рынок недвижимости Молдовы: Кризис, о котором не принято говорить.
What will happen if the proposed measures are implemented
Today it is proposed to continue the same logic, only with a different sign: not to tighten, but to simplify. The result will be symmetrical.
The first consequence: legal transactions will become fewer, not more. Any change in transaction rules – even under the guise of simplification – increases transaction costs during the transition period. Market participants will not adapt instantly. Some of them will prefer to wait. With the number of solvent buyers already shrinking, even a slight increase in uncertainty can lead to a significant additional decrease in activity.
Expanding the provenance period to five years and introducing personal liability declarations short-term will allow a number of transactions that are now non-compliance. But this is not a restoration of liquidity. It is replacing part of the real solvent demand with capital of opaque origin. The number of legal transactions with verified participants will not grow.
The second consequence: the informal market will expand. Demand for real estate does not disappear – it changes form. Where the formal market becomes overly complicated or expensive, alternative mechanisms appear: transactions through powers of attorney, private installments without bank participation, agreements that are legally formalized in one way, but actually function differently.
This segment already exists. Administrative pressure on the formal market will expand it. This is how it has worked in other sectors of the Moldovan economy. This is how it works in real estate markets in all countries where the regulatory burden exceeds the economic feasibility of participating in the legal turnover.
The expansion of the informal segment means not only lower tax revenues. It means reduced legal protection for all participants in transactions, increased systemic risks and further degradation of the institutional environment of the market.
The third consequence: direct installments from the developer will bring back deceived shareholders. The proposal to legalize direct installments from developers without mandatory escrow accounts is not a new financial model. It is a return to the practice of the 1990s with more complicated legal formalization.
In a mortgage transaction, the law, regulators and clearly defined rights are above the borrower. The bank is legally responsible for ensuring that the terms of the loan meet regulatory requirements. In a direct installment loan from a developer, the only source of fulfillment is the solvency and integrity of a specific legal entity, often created for a single project.
Without escrow accounts, buyers’ money is placed at the developer’s disposal during the construction phase. If demand does not recover to the estimated level – and demographic constraints make this unlikely – some projects will be financially insolvent. Some of the developers won’t finish. Some will disappear. Buyers paying years of installment payments for an apartment that doesn’t exist is not an abstract risk. This is a predictable consequence of the proposed model.
Fourth consequence: cheap loans to developers will not lower prices – they will create bank risk. The thesis that expanding credit to the construction sector will lower prices does not stand the test of logic. A developer who has received a cheap loan has no economic incentive to reduce the price of a finished object. He has an incentive to build more at the same margin – and wait for a buyer.
In conditions when effective demand is structurally limited by demographic factors, the result will not be a decrease in prices, but an increase in the volume of unsold objects with credit encumbrances. When banks feed the construction sector with cheap loans, but the market does not recover, developers’ bad debts will fall on the banking system. The Spanish experience of 2008-2012 shows exactly what this looks like in practice: developers’ bankruptcies, depreciation of collateral, and a banking crisis.
The fifth consequence: the market will become two-tiered – and both levels will degrade. The cumulative effect of all the proposed measures is the formation of a two-tier market. The formal sector becomes slow, bureaucratically overburdened and accessible mainly to capital of opaque origin. The parallel sector becomes flexible, opaque and unregulated.
This is not a hypothetical scenario. This is exactly how the Moldovan real estate market functioned during periods of previous administrative pressure. This is the direction in which it is moving today.
The fundamental problem is that both levels are degrading. Formal – because bona fide participants, who find it easier not to participate than to comply with the growing regulatory burden, are being weeded out. Parallel – because without institutional protection the risks for all participants in transactions increase.
The real estate market cannot be stabilized by administrative intervention if its fundamental parameters have changed. Demographic dynamics, income levels, availability of credit and investment expectations form the basis of the market. Regulation can affect the form of its functioning – but not its fundamental nature.
The main question, therefore, is not whether the proposed measures will be implemented. They will be implemented – partially, gradually, under pressure from various interests. The main question is how quickly the market will adapt to the new economic conditions. And how expensive this adaptation will be for those who made decisions to postpone it – and for those who trusted these decisions.
International experience: what happens when the real estate market loses buyers
The history of real estate markets in developed and developing countries reveals a fundamental principle: a real estate crisis never starts with construction. It starts with the disappearance of the buyer. It is this mechanism that has underpinned all the major real estate crises of recent decades – in Japan, Spain, Ireland, China and Central and Eastern Europe.
In all these cases, the external picture looked the same. Prices rose rapidly for several years, creating a sense of stability and scarcity. Developers ramped up construction, banks expanded lending, and the government viewed the real estate sector as an engine of economic growth.
However, fundamental demand was largely driven not by rising household incomes but by the expansion of credit leverage. When the credit cycle reached its limit, the market did not collapse instantly. It was losing liquidity. The number of transactions decreased, while prices remained inertial. The market went into a state of frozen activity.
Japan was the first and most illustrative example of this process. In the late 1980s, real estate prices reached levels that were completely disconnected from household incomes. Land in Tokyo was valued more expensive than all U.S. real estate. Growth was supported primarily by bank lending rather than by a fundamental increase in incomes. After credit tightening, the market did not collapse overnight. It entered a phase of prolonged stagnation that lasted more than two decades. Prices gradually declined, transaction volumes remained low and the construction sector lost its role as an economic engine. The main reason was not a shortage of housing, but the exhaustion of credit growth and demographic decline.
Spain went through a similar cycle during the 2008 crisis. During the boom years, the country built more housing than Germany, France and the UK combined. It was assumed that the increased supply would sustain the market. However, after the credit expansion ended, it became clear that much of the demand was credit-based rather than organic. The result was a disappearance of buyers. Developers faced thousands of unsold properties, banks received illiquid real estate on their balance sheets, and the market took more than a decade to recover. The key lesson of the Spanish crisis was that construction does not create demand – it only responds to it.
China is going through a similar process at present. For decades, real estate served as the primary instrument of capital accumulation. Large-scale lending allowed to maintain continuous price and construction growth. However, demographic slowdown and the growing debt burden of the population have led to the gradual disappearance of new buyers. The crisis of major developers, including Evergrande, was a consequence of this process. Despite large-scale programs of state support, the market has lost its previous dynamics. The state is able to slow down the adjustment, but it is unable to create solvent demand where there is none.
Similar processes were observed in the countries of Central and Eastern Europe after mass emigration of able-bodied population. Despite the availability of physical housing stock, the market was losing future buyers. Construction continued but did not lead to a restoration of liquidity. International studies directly indicate that in conditions of population decline, the real estate market inevitably enters a phase of stabilization or stagnation, regardless of the volume of construction.
This explains a fundamental limitation of any housing policy. International organizations – IMF, World Bank, OECD, UNECE – agree in one conclusion: the dynamics of the real estate market is determined primarily by the availability of credit, demography and income of the population, not by the physical volume of construction. When credit expands, prices rise. When credit reaches a limit, the market loses liquidity. When demographics shrink, the market loses future demand. Administrative measures to increase supply can change the shape of the adjustment but cannot change its direction.
Opposing examples confirm the same pattern. Germany exhibits one of the most stable real estate market patterns in Europe, not because more is being built there, but because the structure of demand has remained stable. High employment, predictable incomes and a mature rental market provide stable liquidity without the need for constant credit pumping. In the Nordic countries, transaction transparency and institutional stability allow the market to adjust gradually, without sharp gaps between prices and incomes.
The main conclusion of international experience is unambiguous. The real estate market is determined not by the amount of housing built, but by the number of people able and willing to buy it without excessive debt load. When this demand disappears due to demography, exhaustion of the credit cycle or stagnation of incomes, the market inevitably enters the freezing phase.
This is precisely the phase that Moldova is entering today. This is neither a unique crisis nor the result of individual political decisions. It is a standard phase of the end of the credit and demographic cycle. The only difference is how timely its nature will be recognized – and how realistically further solutions will be formulated.
What can be done in Moldova if the real diagnosis is recognized
If the international experience is reduced to one basic rule – no buyer, no market – then the practical conclusion is inevitable: the market cannot be “unblocked” through construction, simplification of dossiers and public statements. It is only possible to restore the conditions under which the buyer appears on his own.
This means changing the model – from a market held on remittances, credit issuance and growth expectations to one that is held on income, rents, institutional protection and managed credit risk.
This is less spectacular than the promise of “let’s give land and everything will fly.” But international experience is boring precisely because it is tried and tested.
To do this, we need to stop treating with “supply” what “demand” hurts. Building more is only useful when there are solvent households and predictable demographics. In Moldova, with a shrinking buyer base, the “construction stimulus” means primarily one thing: more illiquid meters and more credit risk in the system.
The practical diagnostic criterion here is simple. If the volume of transactions is falling and prices are “holding” – it is not a housing shortage. It is a loss of liquidity.
In such a situation, do not add meters – restore confidence, income and predictability. These are fundamentally different tasks.
We need to transform housing from a “safe deposit box for expectations” into a working asset. Developed markets are sustainable where renting is a normal alternative to owning, not “temporary poverty”.
In Moldova, the rental market exists, but it is not institutionalized:
– contracts are often not registered;
– protection of the parties is weak;
– the tax regime is perceived as a risk rather than a legalization tool.
This keeps a significant part of the housing stock out of real turnover.
Measures that work are known:
– Long lease agreements with clear indexation;
– simplified and incentive tax regime;
– creation of a municipal rental fund as a market benchmark.
The effect is systemic: part of the demand stops breaking into mortgages, investment apartments start working instead of idling, the market becomes less dependent on the credit lever.
The key measure, without which all other measures lose their meaning, is the restoration of real estate market institutions.
The real estate market does not function on the basis of concrete, but on the basis of trust in the rules.
Institutions are not an abstraction. They are concrete mechanisms that make transactions possible:
– Protection of property rights;
– predictability of regulation;
– protection of the buyer from underbuilding;
– transparent financing procedures;
– trust in intermediaries and professional market participants.
The historical experience of Moldova shows that when the institutional environment is destroyed, the market does not disappear – it goes into a gray zone.
Attempts of administrative pressure in the past did not lead to the disappearance of intermediaries, but to their transformation. The number of informal intermediaries has grown. Their function has changed: instead of reducing the risk of a transaction, they have become a tool for circumventing regulatory barriers.
This is not market development. This is its institutional degradation.
Without institutions, the market turns into a mechanism for redistributing risk rather than creating value.
With institutions, the market becomes a self-regulating system.
International practice shows: “soft landing” of the mortgage market is achieved not by bans, but by risk management. Mortgage should serve housing, not create a bubble.
Key instruments:
– Strict debt load calculation;
– differentiation of conditions for investment and primary mortgages;
– reorientation of government programs from market support to housing affordability.
The point is simple: mortgages should be a tool for purchasing housing, not a mechanism for driving up prices.
One of the most effective tools to reduce speculative pressure is price transparency of actual transactions.
Not advertisements. Deals.
Information asymmetry creates a speculative premium. When the buyer does not know the real prices, the market ceases to be a market and becomes a negotiating club of expectations.
A public, impersonal transaction register with median prices and liquidity statistics reduces this effect without administrative intervention.
This is an institutional measure, not a regulatory one.
A primary real estate market exists only where the buyer is institutionally protected.
Escrow accounts, phased disclosure of funds, transparency of the status of land and permits – this is not a complication of the market. It is a condition for its existence.
Without these institutions, the market turns into a mechanism of risk transfer from the developer to the buyer.
The diaspora, a key source of capital, is particularly sensitive to institutional risks. It is the lack of buyer protection that remains one of the main barriers to the return of capital to the domestic market.
Empty housing as an institutional defect rather than a moral problem. Much of the housing is used as a capital storage tool rather than as housing stock.
This reduces real supply.
International practice shows that moderate institutional incentives – tax or administrative – can bring these properties back into circulation without destroying the market.
The goal is not to punish the owner, but to restore the function of housing as an economic asset.
The main conclusion is that markets are not saved by money. It is institutions that save them.
All these measures have one thing in common: they do not create demand administratively. They create conditions under which demand arises naturally.
The real estate market is not the engine of the economy. It is its indicator.
If institutions are weak, the market freezes.
If institutions are strong, the market runs itself.
That is why the main question of housing policy is not how much to build, but what institutions make the market possible.
And it should be remembered that the responsibility for the institutional quality of the market lies with regulators and political decisions of recent years.
Dmitri Tereburke, real estate and valuation expert
