Which districts in Sofia Bulgaria are most popular to buy properties

The past 2017 proved to be the most successful for the real estate market over the past 10 years with growth in all indicators - sales, property prices, new construction volume, new housing loans at historically lowest interest rates. This show analyzes of agencies on the state of the market last year. Growth has been backed by accelerating growth in gross domestic product (GDP) and incomes of the population, record low unemployment and the expectations for stable economic development over the medium term.

At the end of the year, the supply of properties in Sofia was more limited as a result of withdrawals from the market by vendors and depletion of stocks in new-build buildings, especially in two-room apartments. This process was accompanied by a resumption of the price increase in Sofia after the market balance in late summer and early autumn. Since the beginning of the new year the market has returned to a normal rhythm and the supply is good at the moment. A lot of interesting offers have come out on the market and this is driving buyers.

The analysis shows that although there is a tangible increase in property prices in Sofia and they have crossed the border of 1 000 EUR / sq.m, buyers are in no hurry to buy. There are times when they are retiring in anticipation of better offers that fit more precisely to their requirements and capabilities. A great deal of buyers have been looking for quite a long time, sometimes more than a year. This elasticity in demand will gradually slow down the rise in prices as buyers are reluctant to buy at any price.
She adds that there is already a retreat from overvalued property and areas and redirection to other areas. At the same time, supply is on the rise and more and more new-build buildings and second-hand properties struggle for the attention of buyers. Sellers need to be very careful in pricing to make their properties marketable, experts say.

Average prices and availability of properties
Agencies data show that in the 4th quarter of 2017 the price increase in Sofia has resumed and the average price of housing in Sofia rises to 1,095 EUR / sq.m. from 1 060 EUR / sq.m. during the two previous quarters. The annual price increase compared to the 4th quarter of 2016 is 14%. The average purchase price of the dwellings in Sofia is 98,780 euros.
The price accessibility index in Sofia (the ratio of the price per sq.m to the average salary in the capital) remains at around 1.48. There is a slight deterioration in the availability of properties in the capital, but the overall rate is at levels from mid-2011 to early 2012 and is well below its previous bump when it reached nearly 3.5.
Total for 2017 the market in Sofia ends with an average price of 1 050 euro / sq.m. and an average annual price increase of 16%. This is accelerating growth in capital prices from 2016 when we measured growth of 14.7%.

It is possible to track the annual growth of properties in quarters. It accelerates significantly in late 2016 and early 2017 and slows down over the last 6 months. Our expectations are that the growth rate will be further slowed by increasing supply and gradually balancing the market, but will remain within about 10% and 2018.
The more significant increase in prices in Sofia started in 2015 with a growth of 6% when the average price was 790 euro / sq.m. A year later, in 2016, prices reached 906 euro / sq.m. and grew by 14.7% and in 2017 passed the barrier of 1 000 EUR / sq.m. and accelerated their growth to 16%.

Sales volumes
According to the data of the Registry Agency for the 4th quarter, 9,411 property sales were recorded in Sofia, compared to 8,428 in the same period in 2016, an increase of 11.7% on an annual basis.
For the whole of 2017, 28,175 sales were registered in the capital, compared to 26,480 in 2016, which shows an annual growth in sales in Sofia of 6.4%.
The data also show that there is a slight decrease in the growth rate of sales of properties in Sofia (which was over 8% in 2015 and 2016), but this is probably due to the large share of new construction, the deals to be completed and enrolled at a later stage.
The Registry Agency data also shows that Sofia is the largest and is one of the fastest growing markets. Overall, the country declined by -6.2%, while sales in regional cities also declined by -3.4%.

New construction
New construction continues to account for over 60% of sales in Sofia, according to agency data.
NSI data on new building permits revealed that 262 new permits were issued in the third quarter of 2017, the highest quarterly level since nearly 10 years. With this for the first nine months the building permits for residential buildings in Sofia are 626 compared to 495 for the same period in 2016, which is a growth of 26.5%.
These data show that the supply of new construction continues to increase and this will help to meet the available demand and balance the market.
Parameters of purchased homes in the 4th quarter
At the end of the year the most bought apartments - 60% - are two-room apartments, and the availability of two-room apartments in new-building buildings is exhausted the fastest. 30% of the purchased dwellings are three-rooms, 4-rooms and multi-rooms have the lowest share - 10%.

The average area of the purchased apartments is 86.5 sq.m. - about 2.5 sq.m. greater than the area during the 3rd quarter.
There has been a rise in the share of purchased housing on the first floor - it accounts for 27% of the transactions and this is mainly due to this type of stock in the buildings with advanced construction. The most buy apartments on the 2nd to the 6th floor - 70% of the deals. The apartments on the high floors - from the 7th to the 10th, are only about 3% of all purchased.
Most of the houses have been bought under BDS (putty and putty) - 63%. Only 15% of the dwellings sold are fully furnished, which is also explained by the fact that the best-selling apartments are new. The majority of the dwellings were in good condition - the apartments that need major overhaul are less than 2%. More than half - 60% - of the purchased dwellings are heated by thermal power plants.

The average age of properties sold on the market for properties sold at the end of the year was 138 days, a little over four and a half months, and the discounts made on the offer prices amounted to an average of about 1% of the price.

Preferred neighborhoods and property prices in them
Observations from the agencies show that the most purchased homes in the 4th quarter are located in the districts Krastova vada, Studentski grad and Vitosha, with an approximately equal share of sales in them. We add to them the extremely well-presented sales of new-build dwellings in our exclusive Sofia North Park complex in Vrabnitsa 2, which was sold more than 50% before the start of the construction.
Mladost 4 was highly sought after, but due to limited supply, especially in two-room housing, the deals were postponed until a better supply.

The average property prices these neighborhoods are as follows:
• Krastova vada - 1163 euro / sq.m.
• Students' City - 977 euro / sq.m.
• Vitosha - 1107 euro / sq.m.
• Vratnik 2 - 920 euro / sq.m.
• Mladost 4 - 1064 euro / sq.m.
Most expensive are the dwellings in the center and in Lozenets, where average prices for the past quarter were 1 510 euro / sq.m. in the center and 1 407 EUR / sq.m. in Lozenets. In both neighborhoods, luxury apartments with at least 2 bedrooms are preferred.

Perspectives for 2018
The market equilibrium we noted in the autumn of 2017 was a short-lived phenomenon and the upward trend in prices was resumed at the end of the year.
The favorable impact of the economic upturn and all subsequent positive trends such as income growth, low unemployment, affordable bank financing and the overall sense of greater security in both income and property investment continued its action and heated the market in Sofia in the last months of the year.
Banking continued to grow and ended the year with a record 38% growth. Interest rates on loans remain low, already under 4%. While there is an expectation that they will rise, it would be little in line with the decline in recent years and lending will continue to be attractive.
All this will have an impact on demand in 2018, and we expect this year to be very similar this year to the 2017s. The rate of increase in prices will calm down to about 10%, but overall activity will be maintained and this year the property market will again be among the most attractive for investment markets.
Local demand will continue to be a major driver, but our expectations are to be matched by a slight increase in foreign demand for investment property in Sofia.