The company "BolgarskiyDom" offers to your attention a brief overview of the real estate market in Bulgaria for the year 2016. I hope that the analysis made by our analysts predictions will help you to answer the following questions:
- Is now a good time to buy property in Bulgaria?
- Where to invest: in urban or resort housing, residential or commercial property?
- What is the current situation in Bulgaria and what the trajectory will move the real estate market in the short and long term?
The real estate market in Bulgaria – excursion into the history
The development of the real estate market in the period from 2000 to 2017 took place in several stages.
- 2000-2008 – Boom. This period is characterized by a sharp increase in demand for Bulgarian "squares" on the part of buyers from Western Europe and Russia, the intensification of construction and the rapid rise in prices (over 300%).
- 2008-2012 – "Collapse". Due to the global economic crisis of 2008, the demand for Bulgarian housing is sharply reduced, starts a prolonged drop in prices. By 2012, Bulgarian property loses in value to 40% of the peak pre-crisis level.
- 2013-2014 – "Stabilization". In 2013 in Bulgaria prices reach the "bottom", and in 2014 begin to grow for the first time since the crisis began.
- 2015 – present – "Growth". The price trend in 2015, slightly directed upward. Increasing demand and rising prices is particularly noticeable in the capital and major cities of Bulgaria.
5 Trends in the real estate market in 2016
1. The stabilization of the sector of holiday homes. In 2016 the black sea market is "calm". Not, there is high demand for housing, or, on the contrary, the massive sales of residential properties. Offer only slightly exceeds demand, which eliminates the sharp fluctuations in prices, but still pulls the price level down.
Reasons: the market reached a more or less adequate price. And while realtors say the increase in the number of sellers, mainly among the citizens of Russia, increased supply kompensiruet due to a stable inflow of new customers.2. The growth of domestic demand. For the first time in a long time, realtors have noted an increase in domestic demand. More and more Bulgarians become buyers of residential properties, both in the cities and at seaside resorts. In the Primorsky region buyers with Bulgarian passport make 30-40% of the total number of real estate transactions. The main goal of most buyers – the income from rent.
Reasons:
- The improvement of the macroeconomic situation in Bulgaria. i>Reduced the cost of mortgages (to 3.5-4.5% per annum) and the simplification of procedures for obtaining Bank loans.
- The reduction of Bank interest on deposits. The average interest rate on deposits amounted to 1-2%, whereas the yields ranges from 4-7%.
3. Changes in the structure of foreign buyers. In 2015-2016, the number of Russian buyers has decreased by about a third. At the same time the market of new players came – Belarusians, Ukrainians, poles. Last year the Bulgarian realtors have noted an increase in requests for the purchase of property by citizens of Germany, Israel, Romania, the Baltic States.
Reasons:
- The decline in the purchasing power of Russians and political tensions with Europe.
- Affordable compared to other areas of prices and search by Europeans of new options for investment.
4. The boom in the segment of urban real estate. In Sofia, Varna, Burgas and Plovdiv price growth much faster than the average for Bulgaria the values. By the end of December, prices in the capital of Bulgaria increased by 10%, in Varna and Burgas by 5.8% and 7.3%. respectively.
Reasons:
- The growth of domestic demand due to the affordable mortgages and low profitability of Bank deposits.
- The lack of modern facilities in the market.
- High rental yield of properties in the city.
5. The growing popularity of commercial space. For several years the commercial real estate market Bulgaria is growing in double digits, an increasing number of requests for the purchase of office and retail space, aktiviziruyutsya the construction of new facilities.
Reasons:
- Acute shortage of commercial space in the cities of Bulgaria.
- High yield commercial real estate (8,75%-11% depending on type).
Dynamics of prices for the year 2016
Property prices have risen throughout 2016. According to the Bulgarian National statistical Institute with quarterly breakdown, in every quarter of 2016 saw an increase of prices in comparison with the same period of 2015. Moreover, positive dynamics was noted as the primary market and in the segment of the secondary housing. Data of NSI to change the prices given in the table below.
| Category | The 2016 quarters / change in % compared to 2015 | |||
| I | II | III | IV | |
| Total change | +4,6 % | lign: center;"> +6,5 %+8,8 % | +8.1 percent | |
| New housing | +5.8 percent | +4.9 per cent | +7.9 per cent | +7,0 % |
| Resale | +3,8 % | +7,5 % | +9,3 % | +8,8 % |
Price changes in each quarter compared to the previous is shown below.
| Category | The 2016 quarters / change in % compared to the previous sq, 2016 | |||
| I | II | III | IV | |
| Total change | +1,1 % | +2,8 % | +1.6% of | +2,4 % |
| New housing | +0,3 % | +1,1 % | +3,8 % | +1,7 % |
| Resale | +1.6% of | +3,7 % | +0,4 % | +2,8 % |
Forecast for the development of the real estate market in 2017
Customers from Russia will return to the market. The strengthening of the ruble reduces the cost of Bulgarian property to Russian citizens. Given this fact, coupled with increasing oil prices and stabilization of the Russian economy, experts hope to intensify sales to buyers from Russia.
Real estate prices in cities will continue to grow. Supply and demand in the market will be equal only a few years, so the increase in buying activity will occur during 2017.
The average price level will increase. Amid growing demand , real estate prices in Bulgaria to 2017 will continue to grow. This is especially true of large cities.
