2021 was a record year so far for real estate market in Bulgaria for the last 12 years. There was a 20% increase in the real estate transactions in the third quarter of 2021, when compared with the same quarter of 2020, according to the Bulgarian Registry Agency.
Buying a home in this country has become a safe and profitable investment, mainly due to rising inflation, zero interest rates on deposits and high fees imposed by banks.Low mortgage rates also support this trend, especially with regard to buying new construction homes and purchasing “on the green”.On the other hand, the great interest in real estate has led to a reduction in supply.
Another reason for the soaring prices on Bulgarian real estate market is that the sellers are usually looking to reinvest in new construction properties, but are facing delays in new projects, due to rising prices of construction materials. Therefore, the representatives of the real estate sector have no doubt that the increase in corresponds to the current situation on the market.
“Yes, there is an increase in prices, but according to national statistics it is on average about 10-11% on an annual basis for large cities, says in an interview with BNR Blagoevgrad Dobromir Ganev, chairman of the National Real Estate Association. - This growth cannot be described as a “bubble”, he explains, since several factors have affected the market in the last two years, and especially in 2021. Those are tendencies which will continue to influence the housing market in 2022. According to the Chamber of Builders, the average value increase of materials for housing construction is by about 30%. The prices of some materials have increased by over 100%. This, of course, has an impact on construction and will inevitably affect final market prices.”
According to the National Statistical Institute, in most large cities in Bulgaria a significant part of the purchases are with savings, while those with mortgages are about 25-35%, unlike in Sofia, where mortgage payments are 50% of the deals.
The coronavirus lockdown, distance work and online learning have prompted people to look for more spacious housing, says Dobromir Ganev. In 2020 about 200,000 Bulgarians have changed their place of residence from a larger to a smaller city, in an effort to have more access to nature and more open spaces. Most people are also thinking of buying a second home.
Over the last two or three years a new group of byers have emerged on the real estate market, experts in the sector point out. These are young people under 25-30 who start their first job with an income well above the average for Sofia.
What homes are in demand and what is the profile of buyers?
“Currently, one-bedroom apartments are the best-selling on the market, says Penka Mitova, a real estate broker. - Some clients are buying them for investment, others - for housing. Most are young families, people in the IT sector or in outsourcing companies. Bulgarians working abroad also buy housing to invest. There are many clients from the countryside who buy homes in the capital for their children instead of paying high rents. In this category are many Greek nationals who buy homes for their children who study medicine in Sofia.
Among the property buyers in the countryside, there are also people who buy and resell at a profit. The demand for real estate is high, so this year the prices will go up,” the broker predicts.
The demand and purchase of real estate properties will definitely continue to rise in 2022, especially if the interest rates on mortgages continues to be as low as experts expect. Inflation will continue to have a strong impact on the market, at least in the first months of this year, according to representatives of real estate agencies.
On the other hand, the growth of the savings of the buyers will increase the share of the deals with paper money.