The data shows that while many other areas of Europe are seeing house prices slump, residential property prices in Bulgaria increased by almost seven per cent during the first quarter of 2008.
The most expensive properties are those in the capital city of Sofia, where prices are expected to continue to rise, with annual growth of up to 20 per cent expected by the end of the year.
'There is a clear tendency among new EU entrants for the jobs and wealth of the country to be concentrated in the capital city. This phenomenon is definitely occurring in Bulgaria,' says Dan Johnson, managing director of The Move Channel. 'Although much of the international property development has focused on the ski areas and the resorts along the Black Sea Coast, these areas are a little more speculative than Sofia, which is where the majority of the smart money has been invested.'
Compared to other European capitals, Sofia is still an extremely affordable place to buy, but this looks set to change over the next twelve months.
'In terms of average prices, Sofia still has some way to go to catch up with Western European cities,' Dan says, 'But as the general level of wages continues to rise, expect the price growth to continue.'
Most analysts expect the number of potential buyers in Bulgaria in 2008 – 2009 will be significantly reduced compared to the numbers who swelled Bulgarian developers' coffers in 2003, 2004, 2005, 2006 and even 2007.
The British and Irish investment appetite for relatively low grade, low returning overseas rental real estate which was fuelling a price boom until recently will fall in line with British and Irish house prices, and emerging markets like Bulgaria's will suffer as fewer investors come to the market.
There are also concerns that land prices are too high, infrastructure still needs improvement and there is an oversupply in areas like Bansko at the heart of the ski region.
'It was unfortunate that investors had to finance the construction of infrastructure and not municipalities,' said Rosen Plevnaliev general manager of Lindner Bulgaria . But despite the problems Bulgaria’s real estate market is still regarded as having room for further growth in the next three years.
