Residential properties in the Bulgarian capital Sofia could fall by another 10% this year followed by a period of stabilization, according to analysts.

"The real estate sector should not be viewed as the driver of the economy. It is just a supporting industry,” Atanas Garov, Managing Director at Colliers International Bulgaria, told Darik Radio.

“Our forecasts are for a slight decrease in the residential property prices and in Sofia the fall is expected to be an average of 10%. It will be sharpest at the beginning of the year,” Garov said.

The same trend will apply to the other types of property as well, according to him.

The statement comes amidst recent hopes that 2010 would see a recovery in the hard hit Bulgarian real estate market as already lower prices would entice buyers back, especially those seeking a bargain.

Average asking sales prices across all property sub markets fell 20% on average in the second half of last year on an annual basis, data of realtors shows.

There are significant differences between neighborhoods, with no particular area being resilient to the changed market conditions, according to a report of Colliers International.

Only Doctor’s Garden remained above 2007-levels, but the experts point out that there were quite few offers with a wide span in prices per square meter.

During the second half of 2009 the supply of new residential units grew at a modest pace. According to data published by the National Statistical Institute, the growth rate was reduced to almost half of what was delivered to the market in 2008; 41% fewer units were added to the market in 2009 compared to 2008.

In general, there was limited supply of high-quality properties on the market. In H2 2009 very few projects entered the construction phase. Usually those projects had previously secured financing but have experienced delays due to administrative obstacles.

Many residential developments continued the construction works, but at a slower speed. Some projects were put on temporary hold, either due to shortages in financing or low demand.

Demand started picking up in August/September after six months in 2009 of almost complete stand still, the majority of it focused on properties priced below EUR 1,000/sqm for a fully finished product.

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