The average asking sales prices for residential property in the Bulgarian capital Sofia continued to fall, though slightly, in the first part of 2010, data of realtors shows.

Prime neighborhoods have a negligible, average decrease of 3% for the first half of the year, while the year-on-year comparison shows an average decrease of 17%, according to a report of Colliers International.

The average asking sales prices in prime neighborhoods such as the Doctor's Garden, Lozenets, Ivan Vazov and Iztok stabilize in the beginning of the year. On year-on-year basis, the average decrease is around 15%.

The emerging areas Vitosha, Bukston and Manastirski Livadi saw a decrease in the average asking prices of 5-6%, with an average 19% year-on-year decrease.

The fall in prices is due to soft demand, Colliers experts say.

Developers remain flexible; willing to offer attractive schemes for installment payment, finishing works or parking spaces as well as rent-to-buy opportunity.

Buyers are careful and have high expectations from the developers. Few, if any, transactions are closed on the asking sales prices.

Buyers' budgets remain limited – buyers are rarely willing to exceed prices above EUR 1,000/sqm. The average threshold of a one bedroom apartment is EUR 40-50,000 with EUR 70-90,000 for two bedroom apartments, depending on the neighborhood.

Experts point out that the positive development in macroeconomic indicators such as unemployment and GDP give ground for moderate optimism in terms of the demand.

"Encouraging development in consumer confidence, together with the availability of mortgage financing further creates the prerequisites for a recovery of the residential market,“ reads Colliers report, adding that the light at the end of the tunnel is certainly visible.

The supply in the first half of 2010 grows very moderately, according to Colliers report.

According to data from the National Statistics Institute, the number of construction permits issued for Sofia for Q1 2010 fell with 26% compared to the same quarter in 2009. The average number of units per residential building is 2.6 for Q1 2010, compared to 4.2 in 2009 as developers ambitions dwindle. O

The number of newly completed units in Sofia almost halved in Q1 compared to the first quarter of 2009. Meanwhile, no large-scale projects were started during the first six months of the year, but some residential projects have obtained fresh injection of financing, and have resumed construction.

As expected, the foreclosure market is growing slightly, but still does not impact the overall residential market significantly.

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