Romania's buoyant real estate market may lose steam as financial turbulence boosts borrowing costs and leads to tighter lending conditions, the finance minister and the International Monetary Fund were quoted as saying.

The real estate market, including construction and hefty foreign investment in property, has so far been a key driver of growth in the new European Union state as buyers flocked to what was seen as one of the most attractive sectors in Europe.

'It is possible to see a contraction in the residential housing area,' Finance Minister Varujan Vosganian was quoted as saying by daily Ziarul Financiar on Friday.

He said did not expect a fall in the price of industrial real estate.

The Ziarul Financiar newspaper also quoted the International Monetary Fund's senior representative in Romania as saying the domestic real estate market would lose some of its lustre.

'Real estate yields will not be so high any more,' IMF's Juan Jose Fernandez-Ansola said. 'A slowdown in sales and a halt in real estate prices can be seen already.'

Overall construction grew 33.9 percent in the second quarter of this year, compared with 32.3 percent in the same period in 2007, data showed earlier this month.

The gross domestic product rose 9.3 percent in the second quarter from a year earlier, the fastest rate in the EU.

Source: Forbes