The real estate market in Bulgaria goes up

After five years of decline in prices of residential properties in Bulgaria, reaching bottom, now we see signs of a gradual increase. The average decline in the prices of housing in Bulgaria in 2013 is 2%, as in Sofia there is virtually no change.

The volume of sales also increased according to the data of the registry Agency. Nearly 3% more real estate deals are concluded in 2013, compared with 2012, in Sofia and other large cities, this increase is greater, indicating in the analysis of the property market.

With the stabilization of prices, have emerged and some positive trends — an increase in the number of new mortgage loans in comparison with previous years, resulting from lower interest rates, better conditions for lending and the realization on the part of potential buyers.

There is also increased interest in residential properties for "investment purposes." Also purchases with the intent for subsequent rental. Even the sale of residential properties in the early stages of construction, are rising slightly.

Buyers are increasingly focused on properties with added value-lawns, good environment infrastructure, availability of parking, etc.

According to data of the National Statistical Institute the reduction in the number of newly completed dwellings in Bulgaria in the first 3 quarters of 2013 is only 2.2% compared with the same period in 2012. The data for new permits for construction of homes show a growth of 15.6% in 2013.

These data are a sure sign of confidence in the market by investors and entrepreneurs, and on expectations that demand will grow in 2014 and will stop its downward trend, perhaps even will begin to increase.

The increase of sales volume in 2013 is a sure sign that the demand for residential properties will continue to rise. House prices at the beginning of 2014 are the most affordable of the last 10 years, also the credit institutions now offer better conditions for the provision of new mortgage loans and the renegotiation of the existing ones.

With improving economic conditions in the EU, the level of economic uncertainty is reduced.

We can distinguish two groups of buyers, who are most active at the moment - the first are driven by the immediate housing needs. They are looking for cheap and affordable housing. The second group is more affluent. They are looking for a higher grade, more spacious and luxury homes.

There are signs of recovery when purchasing by investment objective, buyers are increasingly critical in trying to achieve the best price/quality ratio. They are increasingly looking for additional options, such as a good quality of construction and the surrounding infrastructure, large green areas, easy accessibility, ample parking and available features within the project or in the immediate vicinity.

The proposed price range in the medium and high quality in the market of residential property in Sofia is 800-1200 euro per sq. m. (without VAT), depending on the location, quality of construction, finishing and facilities.

Sales prices in Sofia vary considerably depending on the specific location and level of infrastructure, and the availability of public amenities in the vicinity.
The southern and eastern regions in the capital shall continue to be regarded as one of the most attractive and offer prices of the properties in these neighborhoods are in a wide range-from € 800 to € 1,000 per square meter.

The development of Sofia Metro system also has a big impact, places along the existing two lines become more attractive and therefore more expensive.

The prices for the apartments are lowest in the northern and western districts of the capital: apartments in buildings under construction can be found from around € 500 per sq. m, completed – around € 600-700 per sq.m.

The average price of rents in Sofia vary between € 3 and € 6.5 sq.m per month, depending on the location and level of furnishing of properties. The demand for rental apartments in Sofia, even slightly increased as demand diminishes after years of booming amid the migratory flow to the Bulgarian capital.

The unemployment rate in the capital is significantly lower compared to the average for Bulgaria – 5.9%, as it is among the lowest in the European Union.

Monthly salary in Bulgaria is above the national average – about € 500 per month.
The demand for luxury rentals has decreased in the recent years as a result of the global economic crisis.

In addition, new companies, specialized in the provision of complex services for the rental of furnished apartments, including maintenance, repair and management of real estate, which appeared on the market, further increased competition.

The demand for residential properties in Bulgaria has enormous potential to grow in the near future because of two main reasons: the majority of the existing stocks of housing were built in the 1970s and the 1980s with operation period of 50 years. At the same time, the average number of rooms per person in Bulgaria is 1.1, which is below the average for the EU of 1.7.

Overall, the observed stabilization of sales and rental prices and the increase in demand and volume of demand, and probably the relative market balance achieved in 2013 will continue through 2014.