Sellers Already Openly Reduce Offer Prices of Properties

Imam Imot Magazine, November-December 2009

Polina Stoykova, the Chief Operations Manager of BULGARIAN PROPERTIES, comments the current situation on the real estate market:

- Ms. Stoykova, can it be said that sellers already openly offer their properties at lower prices and not only after a bargain with a potential buyer?

- Since May 2009 sellers decrease the prices of their offers more openly as now they understand that prices have really fallen. This was once again confirmed by the National Statistics Institute – according to them the average decrease of property prices in 2009 is 28% compared to the peak prices in the period August-October 2008.

The trend of property price decrease can also be traced from the weekly Latest Ads bulletins of Bulgarian Properties where apart from the newly-published offers there is also a section with offers whose prices have been reduced during the week. In the last 2 months the number of properties with reduced prices is almost the same as the number of newly-published offers.

This trend will continue because offer prices and prices at which deals are concluded are still different.

- According to your company for which property type is there mass price decrease – holiday homes, luxury properties or residential properties?

- Prices fell the fastest in the segment of holiday homes in the ski and seaside resorts – the process there started as early as at the end of last year. That was followed by a significant decrease in the prices of rural properties and agricultural land and since June 2009 we are witnessing a gradual decrease in offer prices for city properties in Sofia followed by Varna, Bourgas, Plovdiv and other big cities around the country.
Rental levels of residential and office properties in Sofia and Varna also went down by an average of 20-30%.

In the luxury property segment the price decrease is lower compared to the general trend – it is about 20%; prices of properties which are unique and of the highest class have not undergone considerable changes. Prices of residential properties in the center of the capital Sofia have decreased less compared to the properties in the other quarters.

- Is the market more active now or are we once again entering an “ice age” due to the stagnation, the crisis and the fear of unemployment?

- According to the latest data of Bulgarian Properties the activity on the market in October is 31.5% higher compared to September 2009 regarding realized deals. Until October 25th 2009 the deals were concluded at the same pace, as those realized in September and in the last days of the month made up 30% of the total number of deals for October. The main drivers on the market were the properties in Sofia and Varna.

In the last two months there are already concluded deals in Varna as before that the market was at a standstill. Thus October is the second most active month for 2009 after June. The deals concluded in Sofia in October are at levels of 750 to 900 Euro/sq.m., at prices between 55,000 and 65,000 Euro. The decrease in Sofia prices based on actual concluded deals is about 24% since the beginning of the year. In the first quarter of 2009 the apartments in Sofia were sold at an average price of 1,050 Euro/sq.m., in the second – for 1,020 Euro/sq.m., in the third – for 945 Euro/sq.m., and in October the average price was about 800 Euro/sq.m.

We can also say that in October there was higher interest and enquiries about certain properties which are offered at bargain prices and this interest is powered mainly by the price.

The decrease in the number of realized deals in October 2009 compared to the same month last year is 35%. October 2008 was the last good month on the real estate market before the decrease at the end of last year and the deepening of the crisis in 2009.

- What part of the buyers are private persons looking to buy for investment purposes?

- The properties purchased this year are mainly for personal use – a home, changing the current home for a better one, first holiday home in a ski or seaside resort or a rural house.

Rarely were there clients buying only for investment purposes because the market conditions are not favorable for such deals. Nevertheless, it is good to know that investment in property should be seen as a mid to long-term investment and in this aspect properties are a good means to preserve the value of the money. If a household has resources then it would be wise this resource to be divided between different assets including property. One should only act rationally and make the best possible choice.

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