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What was 2015 like for Bulgaria’s property market? The market continued to recover, with steady increases in home purchases and sales, building permits and new construction projects. The main sign of stabilisation, however, was rising housing prices, including in the major cities of Sofia, Plovdiv, Varna and Burgas. Bulgaria’s government continued promoting seaside resorts and developing recreational infrastructure, including new and modernised wastewater treatment plants and modern motorways.
Bulgaria was also affected by negative developments in global markets, including the influx of refugees from the Middle East and falling tourist arrivals from Russia and the CIS. The latter was driven by lower oil prices, sanctions and the depreciation of the ruble and the national currencies of Eastern European countries.
Looking back, we would like to recall some of the events we consider important from 2015.
Market recovery: more property transactions, mortgages and construction activity
According to Bulgaria’s statistical institute, the number of property transactions increased significantly in the first half of 2015, rising by 11% year on year. Quarterly figures also showed growth in purchases and sales. For example, the number of transactions in the second quarter was 15% higher than in the first quarter of 2015.
Positive trends were also recorded in mortgage lending and construction. In the first 6 months of 2015, Bulgarian banks issued 42% more mortgage loans than in the same period of 2014. At the same time, the number of building permits issued increased, as did the number of new construction projects. This concerned residential buildings as well as industrial and administrative facilities.
Positive property price trends
Stronger demand for property in Bulgaria’s major cities from domestic and foreign investors pushed prices up. In the third quarter of 2015, year-on-year price growth compared with the same period of 2014 was:
- Sofia — 6%
- Varna — 6%
- Burgas — 6%
- Plovdiv — 4.5%
A key trend in 2015 was that property prices in Bulgaria continued rising for a second consecutive year. The nationwide average price per square metre increased by 3% in 2015.
Results of the 2015 tourist season
In summer 2015, Bulgaria received 4.5 million foreign tourists, 149,000 fewer than in 2014. The 3.3% decline was partly due to fewer tourists from Russia, down 25%, and from the CIS.
Despite lower tourist flows, Bulgarian authorities are optimistic about the 2016 season. Their optimism is linked to measures to stimulate tourist arrivals from Russia and other factors, including the closure of Turkey as a destination for Russian tourists.
Property buyers from Russia and the CIS
At the beginning of 2015, experts predicted a significant decline in the activity of Russian, Ukrainian and Kazakh property buyers. Their forecasts were partly fulfilled and partly not. Property purchases by Russians fell by at least a third, while more Russian citizens began selling their properties. Belarusians and Kazakhs also bought less.
There was also a positive development: Ukrainian buyers became more active, viewing Bulgarian property as an attractive investment against the backdrop of a deteriorating situation at home. In 2015, Ukrainians overtook Russians in the ranking of buyers.
That was 2015. What will happen to property prices in 2016? How will foreign buyers behave? The coming year will tell.
