Recovery of Bulgaria’s Housing Market

The housing market in Bulgaria is in full recovery with buyers returning to purchase homes in the major city centers. Renewed confidence in the economy and residential sector resulted in the most buoyant year ever since the Global crises hit in 2008. Greater affordability of property combined with improved mortgage conditions are expected to propel transaction activity upward and increasing home prices are anticipated to continue momentum through year-end 2015. Home prices nonetheless remain about 35-40% off peak, which should be a signal that opportunities are to be found in this home market. One silver lining being that Bulgarian luxury property is more affordable than ever; prices for these homes can range from €1 to €7 million. The Black sea is a popular region that attracts many foreigners seeking seafront property.

These wealthy investors seek gated communities with swimming pools in proximity to the sea. Home sales have increased by 8% during the first semester of 2015 when compared to the same period in 2014. The most significant market being the capital city of Sofia and immediate surrounding areas where more than 30% of total sales occur, followed by the cities of Varna (5%) then Burgas (3%). In fact, four primary Bulgarian city-markets form 80% of all the sales activity. The foreign investor continues to play an important role in this home market. It is estimated that 30% of foreign buyers are English, with 20% being Russian.

Current demand is for apartments in city centers and houses in the city outskirts, as well as the favored beach and ski resorts. There is a trend for first time buyers to buy property in the city center solely for
investment purposes. As long as interest rates remain favorable and the economy continues to improve, this is a trend that should persist.

Mortgage rates have been moving downward for some time now. Currently a fixed rate, long-term loan can be found in the range of 6%, though this rate is higher than most Western European markets, it is a historically low rate for this market. Loan to value ratios are typically at 70/80%.

As the general economy improves, unemployment is at its lowest in several years now, at about 9,8%, and GDP is up by 2,2% thus far in 2015; the housing sector should continue with a modest but sustained recovery.