Bulgarian homeowners are holding onto their properties in anticipation of even higher prices
Address real estate agency expects this to stimulate construction and further increase housing prices in the country
![Bulgarian homeowners are holding onto their properties in anticipation of even higher prices](/web/files/articles/145210/narrow_image/thumb_1040x585_jilishta-v-sofija.jpg)
Photo: Krasimir Svrakov
The development of the housing market in Bulgaria and the direction it will take is a never-ending topic. Almost every person in the country takes part in one way or another in that market. There are those who stand aside and watch and wait. Others are waiting for prices to fall in order to buy an affordable home. Others are waiting for the market to heat up even more in order to make the most of it and sell their apartment for the highest possible price.
In recent months, it appears that more and more people are on hold – keeping their properties off the market, presumably with the aim of getting the best possible deal. Which in turn exacerbates the lack of housing supply amid high demand.
A shift in the landscape
The drop in the number of home sale listings in Bulgaria from the beginning of the year until now is more than 20%. This is happening against the background of sustained and even growing demand and an increasing number of concluded deals. Activity in Sofia has increased by 7% on an annual basis, and in Varna and Plovdiv - by 8% and nearly 20%, respectively. This is according to the report of Address.bg (real estate agency) for the first half of 2024.
We have seen a steady trend since the spring - many people are delaying the decision to sell despite the high prices at the moment. Property owners who do not need urgent money do not see a reason to part with their properties," commented Gergana Tenekejieva, executive director of the real estate company.
According to her, if this trend continues amid growing demand, we will witness a classic seller's market.
On the one hand, this would lead to additional growth in housing prices. On the other hand, developers will try to compensate for the shortage and the volumes of new construction will increase," adds Tenekejieva.
Only 10% of Address customers sold their property during the six months due to an urgent need for cash. About 18% of owners are selling to buy, and over 30% are seeking to exit their investments in order to profit from the conditions of high prices. The latter group is the largest of all sellers for the analyzed period.
Expectations that inflation or financial difficulties would force many sellers to put their properties on the market, resulting in lower prices, did not materialize. At the moment, we are not even observing any potential factors that could lead to a decline," says Tenekejieva.
Which way will property prices go?
From the data in the report of the real estate company, it is clear that the final transaction prices in Sofia for the period January to June 2024 have increased by about 8%. In Plovdiv, their levels rose by 17%. Growth has also been observed in the cities of Varna and Burgas.
A little over 40% of transactions for the period were financed with the buyers’ personal funds, the company's data shows. Of the purchases realized with the help of credit, nearly half were with a bank loan, which covers over 80% of the value of the transaction. The remaining buyers using a mortgage took out a loan for 30% to 80% of the price of the property.
Although banks are tightening lending in terms of criteria for borrowers, the amounts they lend are still significant. This means that not everyone can take out a loan anymore, but people with sufficient savings and with stable incomes have no restrictions regarding the size of the loan," says Tenekejieva.
Investment deals
A total of 24% of property deals in Sofia are for investment purposes, in Varna this share is 21% of purchases. In Burgas, about 30% of the homes were bought for investment purposes, and in Plovdiv - 26%.
According to the Address realtors, after a short period of withdrawal of investment-minded buyers as a result of rising prices, today they are returning to the Bulgarian housing market. These are people who have cash on hand and prefer to invest it in safe assets, such as property, even if their rental yield isn't very high afterwards.
The most sought-after homes on the market continue to be the 2-room and 3-room apartments. They form over 75% of all transactions, and the buyers’ interest in both of these is currently identical. Private car garages form just over 5% of property purchases in Sofia. Their average price is 25,000 euros.
The average age of the property buyer in Sofia is 41 years. The male-female distribution is relatively identical, with the buyers’ professional backgrounds mostly in the fields of healthcare, construction, IT, trade and finance.
Translated by Tzvetozar Vincent Iolov