Google, Amazon, Meta and Apple are Meeting in Sofia
Google, Amazon, Meta, and Apple are among the tech giants slated to convene in Sofia for a landmark event in 2025
HOT: » Assessing the Legacy of Bulgaria's "Denkov" Cabinet: Achievements, Failures, and What Comes Next
Property prices continue to rise, but there are already signs of a slowdown in growth. It is expected to be more pronounced in the second half of the year, since the more significant increase last year was also registered then.
Both investment buyers and those looking for a property to live in are active on the market. The share of purchased three-room apartments - 42%, is already equal to that of two-room apartments, which last year dominated the market with a share of 70%. Property stays on the market continue to be short, with deals often being completed in a matter of days.
This is shown by the data from the beginning of the year of "Bulgarian Properties".
The agency reports that new property listings are up about 10% from the same period in 2022. This is the first increase since 2019, as the first quarter of 2020 was marked by the pandemic and limited business activity, and after that, the available supply began to quickly run out. The properties that went on the market could not satisfy the increased demand and catch up with the pace of realized sales, according to the company's analysis.
The volumes of newly granted housing loans are also increasing. According to BNB data, after the slowdown at the end of 2022, in the first months of 2023, loan volumes increased by about 20% compared to a year earlier and returned to the growth levels characteristic of the past 2 years of high demand and strong housing market. This is one of the most important factors driving the market and its influence remains positive at the moment.
In the meantime, however, on Wednesday the BNB announced measures that will come into force from the summer and aim to cool credit activity.
The expectations for an increase in interest rates on loans are not justified for Bulgaria, the agency notes. Last summer, when the ECB started to raise its key interest rates, the expectation was that this would also affect the cost of loans by early 2023 at the latest.
The increases remained minimal - within 0.06 percentage points for loans in BGN, which are 98% of the granted loans, and this gave confidence to buyers to continue with their plans to buy homes, notes Polina Stoikova, executive director of the agency.
Other macroeconomic factors affecting the housing market continue to have a positive impact - unemployment is below 4% and incomes have continued to grow - by an average of about 17% at the end of 2022, according to NSI data. Thus, incomes, although growing at a slightly slower rate than prices, keep the price-to-income ratio stable, which gives us housing affordability, she points out.
Inflation continues to be a significant driver of real estate investment growth, especially amid continued zero interest rates on deposits and limited safe investment alternatives, the analysis shows.
All this so far leads to a very similar picture to that of last year, but with improved supply and a new market balance achieved. Forecasts for a drop in demand and prices, for a recession and a crisis are not justified so far, notes Stoykova.
Prices continue to rise in Sofia
The average price of homes purchased in the first quarter of 2023 in Sofia, according to the agency's data, is 1,545 euros/sq.m. at 1,345 euros/sq.m. in the first quarter of 2022 and 1,550 euros/sq.m. at the end of 2022. This represents growth of almost 15% on an annual basis and holding levels on a quarterly basis.
Growth on an annual basis in the previous quarters was 22-23%. It can be seen that the current rate of growth is slowing down, but remains significant, Stoykova points out. After adjusting for inflation, real growth remained at just 1.3% on an annual basis, the lowest level since 2020.
According to the expert, prices in Sofia have reached a peak and are driven almost entirely by inflation. Its slowdown contributes to the expected slowdown in house price growth as well. "For the last 3 years, the square meter in the capital has increased in price by nearly 40%", said Polina Stoykova.
The average salary in Sofia reached BGN 2,704 in the last quarter of 2022, so for buying 1 sq.m. residential area in Sofia at the end of last year, about 1.12 average monthly Sofia salaries were needed. For comparison, in 2008 (at the previous peak of the market), 3.4 salaries were needed for the same area, the agency indicates.
The biggest price increases were recorded from the end of 2021 and into 2022, with growth accelerating throughout 2022 and reaching 23% at the end of the year, the agency's data showed.
According to them, the average total price of apartments bought in the first quarter rose to €132,800 against a €115,500 average price in 2022. This in turn shows that market activity has shifted to larger apartments on the back of predominant purchases of two-bedrooms housing last year.
Deals are down, but by not much
Data from the Land Registry for the first quarter, released this week, showed a third consecutive quarterly decline in the number of transactions on an annual basis. For Sofia, the decline was 12.2% in the January-March period, compared to 15.17% in the second half of 2022.
The agency's data show a much smaller drop in sales volumes in Sofia during the first months of the year - below 5%. This is explained by the active market of new construction, in which transactions are registered at a later stage when they are declared.
Preferred neighborhoods and property prices in them
And in 2023, the most preferred neighborhoods in the wide center of Sofia, such as "Banishora" and the Zones, as well as "Malinova Dolina", where the construction of a number of new complexes and buildings of new construction is underway.
The average prices in the most popular neighborhoods in the 1st quarter of 2023, based on actual transactions, are:
Follow Novinite.com on Twitter and Facebook
Write to us at editors@novinite.com
Информирайте се на Български - Novinite.bg
/Dnevnik
We need your support so Novinite.com can keep delivering news and information about Bulgaria! Thank you!
Bulgaria has witnessed a remarkable surge in home loans at the beginning of the year, with loans for households for the purchase of houses and apartments reaching a record high of BGN 20.52 billion by the end of February
The housing market in Bulgaria witnessed mixed trends in the fourth quarter of 2023, with overall prices experiencing a modest increase of 1.2%
Bulgaria witnessed a staggering surge in mortgage loans in 2023, totaling a monumental BGN 6.39 billion
Amidst the backdrop of Bulgaria's dynamic real estate landscape, all eyes are on the potential impact of the country's imminent entry into the Eurozone
This information was shared during the presentation of data on the current state of the market to journalists
Russia has issued a stern warning in response to Bulgaria's recent legislative efforts aimed at seizing Russian real estate
UN Happiness Report: Bulgaria's Astonishing Leap in Rankings
Bulgaria: 3 Regions With Lowest Life Expectancy - EU Report 2022