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Transactions increase in Bulgarian real estate market

Prices fell by 6.4% year on year in the second quarter of 2011, according to the latest figures from the National Statistics Institute (NSI).

In quarterly terms, housing prices fell by 1.6% and 23 regional cities registered quarterly drops in prices, with Veliko Turnovo recording the most significant decline of 5.5%  followed by Gabrovo at 5.4% and Vidin and Plovdiv both at 4.7%.

In the major cities the picture was better with prices in Sofia falling by just 2.1% and prices in Varna edging up 0.9%. The highest rise in housing prices was 1.3% in Rousse and Blagoevgrad.

The figures also show that the average price of flats in the country was 908.98 leva per square meter between April and June and prices were the highest in Varna, at 1,509 leva per square meter, followed by Sofia at 1,466 leva per square meter and Bourgas at 1,163 leva per square meter.

But other figures suggest a different picture. Prices of residential property in Sofia dropped by 10.1% in the second quarter of 2011 compared with the same period of the previous year, according to an analysis by Raiffeisen Real Estate. On a quarterly basis, however, housing prices in Sofia increased by 3.6%.

The same set of figures show that in Plovdiv, Bulgaria's second largest city, prices of residential properties sold in April and June declined by 2.6% on the year, but edged up 0.2% quarter on quarter.
In the Black Sea city of Varna, the country's third largest, the average housing price fell by 6.9% compared with the same period in 2010 and by 1.5% on a quarterly basis.

Since the beginning of the year, the country's residential property market has started to stabilise, albeit at a slow pace, Raiffeisen Real Estate said. The market is primarily driven by buyers looking for housing for themselves, seeking the best ratio between price and quality of the property, according to the report.

More people are buying as transactions rise, according to real estate agents. they say that for the first time since the start of the real estate downturn the number of deals has risen.

The country's economic growth, coupled with the drop in property prices has led to a rise in sales, which is the first positive sign for the market, according to Polina Stoykova, chief operating officer at real estate agency Bulgarian Properties.

According to Tihomir Tsakov, head of property agency Aristo, a more rapid recovery by the market is being curbed by unemployment, subdued demand and frozen incomes.

Registry Agency data shows that the country's property market saw a 27% annual increase in the number of deals in the first six months of the year, with the country's four largest cities, Sofia, Plovdiv, Varna and Bourgas, also displaying increases.

The highest number of transactions was in Sofia and in places along the country's southern Black Sea coast, which contributed 40% to the total volume of property sales in the country, Stoykova said.

Meanwhile, National Statistics Institute data showed that the number of building permits issued was still low compared to levels before the downturn, indicating that developers are still not willing to launch new projects.