Property in Bulgaria predicted to stabilise in second half of 2010 with Sofia leading the recovery
Bargain prices, a good choice of supply and more suitable credit conditions are poised to help lift the real estate market in Bulgaria out of the doldrums, according to analysts.
Although they expect some price falls generally they are predicted to stabilise in the second half of 2010 and the market return to normal within the next 12 to 18 months.
Sofia, the country’s capital city, is likely to lead the recovery, according to Tatyana Emilova, manager at Colliers International Bulgaria. The company’s latest research shows that prices have fallen 3% in the first three months of the year as the market moves towards bottoming out.
According to Colliers all markets have been affected by the property downturn and in Sofia the average yearly price decline was 20%. It found that after an almost complete stand still in the first few months of 2009 demand started to pick up in the autumn driven by an increase in mortgage availability and falling interest rates.
Falling prices and developers willing to be more flexible with potential buyers in terms of price and payments has added to demand, she explained. Generally, financially dependent developers are ready to sell at reduced prices with some even offering price levels that are close to the construction cost of the project.
The recovery is likely to come at the lower end of the market. ‘Generally buyers have limited budgets and are reluctant to increase them. Our experience shows that the majority of the demand is focused on properties priced below €1,000 per square meter for a fully finished product. Transactions rarely take place before construction is completed or close to completion,’ she said.
Price falls also mean that those who are looking can afford a larger property and others who could not afford to buy and now actively seeking small one bedroom apartments. Buyers preferences have changed.
‘In general, buyers are very well informed now and have become much more demanding and selective when it comes to choosing their home. They are seeking for an optimal balance between price and quality and environment and neighbourhood is also important,’ said Emilova.
Colliers expects few projects to be launched this year and prices are expected to stabilise in the second half of the year. ‘We can expect normalization of the market during the second half of 2010, as bank financing will become more active, and demand will continue picking up. The most active buyers will still be the ones in real need of a new property and with cash,’ she said.
Developers will continue offering competitive prices and other solutions to match clients’ needs. Provided the overall economic situation in the country is stable, we can expect a full recovery of the market within 12 to 18 months,’ she added