The housing market in Bulgaria continues to grow but slower

2018 is already a story. Check out the most significant events and trends in political and economic life in Bulgaria and the world over the past 12 months.

2018 ended the sharp rise in house prices in Bulgaria, which marked the previous two years, but a decline in the housing market still can not be said. Real estate deals in major cities continue to grow, albeit slower, new large-scale projects are on the market, and the number of building permits is rising, and banks are giving more and more mortgage loans.

The market continues to move from local demand, which boomed in 2014 and strengthened in 2015. This is also one of the distinctive features of the market at the time of the financial crisis ten years ago, when the strong interest of foreigners stimulated price increases.
In the first quarter of 2018, the Eurostat statistical office reported a 7.1% rise in house prices in Bulgaria, which was the weakest since the second quarter of 2016. In the second quarter, the increase of prices accelerated to 7.5%, but remained well below the third and fourth quarter of 2017 levels from 9% and 8.2%, respectively. At the same time, Bulgaria has emerged from Top 10 to the consulting company Knight Frank on the fastest growing housing markets in the world. In the third quarter our country took 14th place after starting the seventh place in the index.

There is also a delay in the number of transactions. The data of the Third Quarter Registry Agency showed an annual growth in Sofia of only 1.2% and a decline in Plovdiv and Burgas, which may be due to the large number of green deals that are reflected in the statistics later. At the same time, brokers also report a change in buyer behavior. They are well considering their property investments, looking at the maximum available properties on the market and not buying at any price, which is also one of the stabilizing factors in the market, experts say.
But there are also no worrying signals. According to real estate agencies, more and more buyers are looking for 100% financing when buying a home, and the number of "under construction" housing deals is increasing. The acquisition of "green" property is always associated with a risk for the financing and implementation of projects in time.

According to the BNB, mortgage loans grew by 10.2% y / y in November and reached BGN 10.415 bn. The same annual growth was also reported in October, despite the BNB's cooling-in of mortgage lending. Rapid credit growth could create risks to materialize in future interest rates or weakening economic activity, the BNB said, urging banks to tighten lending conditions and carefully assess whether their clients would be able to repay their loans. rising interest rates.

With regard to the expected gradual rise in interest rates by the European Central Bank (ECB) next year, bankers in our country believe that it will not lead to a dramatic increase in lending rates next year, but they still advise not to take credit on the brink of opportunity .

Residential Market in Sofia

House price growth in the capital in 2018 slowed to around 5% on an annual basis and the average cost per square meter stabilized at around 1,000 euros. At the same time, the supply of new-build housing has grown and is preferred by buyers.

The location of the property is decisive for its price. According to Address data, the biggest increase in house prices is observed in Druzhba and Ovcha Kupel thanks to the development of the metro and the proximity to the office areas of Tsarigradsko Shose and the Business Park. Two-digit growth in house prices also exists in Lyulin, Lozenets and the central districts.

Most expensive are the dwellings in central quarters like "Yavorov", "Ivan Vazov" and "Oborishte", where prices exceed 1500 euros per square meter, well above the average of 1092 euros per square meter for the third quarter, according to data of portal The main factor for house price growth, apart from the subway proximity, is the good infrastructure in the neighborhood, such as the availability of kindergartens, schools, parks and road infrastructure.

The properties for short-term letting - more and more popular in Plovdiv

In Plovdiv, the development of new productions in the industrial zone attracts people from neighboring areas such as Haskovo, Stara Zagora, Kardzhali and Northwestern Bulgaria, who settle in the city and increase the activity of the property market. Brokerage data shows house price holdings or a slight decline in 2018, predicting that the trend will continue in 2019.

The average house price in the City under the hills in the third quarter reached 854 euros per square meter, well below the level in Sofia. Buyers are from across the country, and the majority of inquiries are for three-bedroom apartments, brokers report.
More and more people in Plovdiv are investing in properties for short-term letting, which, according to real estate agencies, is due to the tourist flow to the city, which will be the European Capital of Culture in 2019. However, the event is expected to lead to rising rents, but not to house prices for sale.


Upper Black Sea Coast

The image of the housing market on the Black Sea seems to be positive. In the third quarter, Varna saw a strong growth in property transactions of 17.5% on an annual basis, according to data from the Registry Agency, as the Marine Capital significantly outstrips other major cities in the country.
The average cost per square meter in the sea capital reached about 820 euros per square meter, with moderate growth. However, a large number of new projects and building permits are expected to affect supply, with experts predicting a slowdown in house price growth in Varna and even a slight decline.
In Bourgas, the data of the Registry Agency showed a decline in the number of deals by 10% in the third quarter of 2018. According to real estate brokers in the last five years, the housing market in the city is stable, housing prices having moderate growth of around 5% half of the year 2018. At the same time, building permits issued in the first six months of the year increased by 99%.