The prices of new homes in Bulgaria are expected to increase by an additional 12-15% by the end of 2025, with a slowdown in growth to around 10% anticipated next year. This forecast was shared by Georgi Shopov, chairman of the National Association of Construction Entrepreneurs (NACP), on Bloomberg TV Bulgaria.

Shopov pointed out that Bulgaria's upcoming entry into the eurozone will continue to heavily influence the property market in the near term. He expects significant foreign investment to flow into the country, some of which will target the housing sector, further driving up apartment prices and reducing affordability for many residents.

To address the rising prices and supply shortages, Shopov urged Sofia Municipality’s Architecture and Urban Planning department to accelerate the issuance of building permits. Increased permit approvals would boost housing supply and help stabilize prices.

According to the association, the price of newly built homes in Sofia rose by 18% annually by the end of the second quarter of 2025. Shopov noted that the rising costs persist despite stabilization in construction material prices. He emphasized that land costs play a crucial role in the final price of developments, as land expenses currently make up 35-50% of the built-up area cost. In some cases, land alone adds around 700 euros per square meter to the total project cost.

However, the pace of issuing building permits in Sofia has worsened, Shopov warned. Despite promises from the new chief architect of Sofia to improve the situation and speed up processing times, the numbers tell a different story. Comparing this year to the last, there has been a significant drop in permits issued, creating a market deficit and contributing to rising housing costs, with buyers bearing the burden.

Shopov highlighted that, in a functioning market economy, demand and supply must be balanced. While demand reflects people’s genuine need for larger or better homes and should not be artificially suppressed, supply must be supported. He dismissed attempts to control demand, referencing the collapse of socialism’s residency policies as an example of ineffective intervention.

He suggested that municipalities and the state could ease the housing shortage by regulating land and cutting down the excessively large administrative hurdles. Currently, Shopov explained, it takes about five years for land to be acquired, regulated, and construction to begin, an unnecessarily lengthy process. Though this delay benefits businesses through maintaining a market deficit and rising prices, it comes at a cost to citizens, and municipalities should reconsider their role in this.

Data from the National Statistical Institute reveals that, in the first half of 2025, construction permits were issued for 5,620 homes in Sofia, marking a 16% decline compared to the same period last year. The downward trend in construction activity appears even more severe beyond this.

To bring housing prices in major Bulgarian cities back toward normal, Shopov proposed that municipalities and the state release unused land to construction companies under compensation agreements. This would allow the development of new housing stock, which municipalities could then use to support social policies, thereby addressing both supply shortages and social housing needs.