Prices in the capital Sofia, were down by 9.4% year on year in the fourth quarter of 2010 and by 5.2% compared to the previous three months, according to an analysis by Raiffeisen Real Estate.
Its property index, the only comprehensive indicator of real estate prices in cities in Bulgaria which is produced in association with the National Real Estate Association of Bulgaria, shows that property in Sofia fell to 300, from 304 in the third quarter of the year and is down from 336 year on year.
In Varna on the Black Sea, the country's third largest city, average prices dropped by 7% year on year but went up 1.9% quarter on quarter, the first increase in residential property costs in the city since the peak of 2008. But the overall index rating is still down, at 302, compared with 349 a year previously.
In Bourgas, which has been popular with foreign property buyers the index stood at 174 in the final quarter of 2010, compared with 214 in the same period in 2009.
Sluggish economic recovery, lack of jobs and rising inflation is affecting the domestic market, according to the report from Raiffeisen Real Estate. ‘Buyers expect to get the best possible proposal within a pre-determined budget,’ it said.
However, inflation could lead to an enhanced interest in property as it could be used as a tool for keeping the value of savings, the report added.
The number of building permits being issued in Bulgaria is also falling. Figures from the National Statistics Institute (NSI) show that local authorities granted 951 housing permits between January and March 2011, down 17.4% on the previous quarter and 3.6% on the year.
Most of the permits for new homes were issued in the municipalities of Sofia, Bourgas and Plovdiv. They will mean some 2,458 new apartments with a combined floor area of 320,010 square meters being built in an already pretty saturated market.
