Average asking sales prices of residential property in the Bulgarian capital Sofia fell by 14% at the start of the second half of the year on an annual basis, data of the realtor Colliers International Bulgaria shows.

On a half-year basis the figure is approxiomately 10%, demonstrating that the largest fall happened in the first half of 2009.

Behind these figures, however, are significant differences between the various areas.

Average asking sales prices fell almost 20% on average in the prime neighborhoods in the first half of the year. Doctor's Garden has experienced the largest decrease (almost 33%) going below to EUR 1,500/m2. This is partly driven by unrealistic/opportunistic offers being removed from the market.

The average asking sales prices in the Ivan Vazov neighborhood decreased with 17%, while in Lozenets the decrease was 12%. Iztok, which was the only area showing an increase in the prices by the end of 2008, has now seen a reversal of fortune with an average decrease in average asking sales prices of 11%.

The emerging neighborhoods proved more resilient with average falls of 6%. The largest change was seen in Bukston (dipping just below the EUR 1,000/m2 mark), followed by Gotze Delchev with a 10% decrease. The areas of Vitosha (EUR 1,036/m2 on average) and Manastirski Livadi (EUR 1,078/ m2 on average) showed almost no decrease, compared with the previous half year period.

The experts expect the restrictive financial situation to continue to influence the residential supply in the second half of 2009 as developers delay the completion of their projects. Very few, if any, new projects are expected to break ground during this period.

Sales prices and rental prices are expected to fall slightly in short term period, followed by a consolidation towards the end of the year and the beginning of 2010.

Given the fundamental health of the residential market, the fact that demand is driven by genuine economics and demographics and the moderately positive outlook for the Bulgarian economy, the residential market is expected to start recovering in the first half of 2010, Colliers experts forecast.