BULGARIAN PROPERTIES’ Chief Operations Manager Polina Stoykova: Buying a Home Cannot be Postponed for Ever

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Polina Stoykova – Chief Operations Manager of one of the leading real estate agencies BULGARIAN PROPERTIES – was among the experts answering the questions of the participants in a probook.bg discussion on the topic Did property prices hit the bottom?

Question: Which are the factors that define whether prices of homes in Bulgaria will or will not continue to fall?

Polina Stoykova: 2011 was a year charged with great expectations for the economy and property market’s coming out of the crisis but unfortunately not all of them came true. This is because the coming out of the crisis depends not only on the pace of recovery of Bulgaria’s economy and on the internal processes in the country but is directly linked to what is happening in Europe and around the world.

The positive news coming from the property market up to now that brings certain stabilization to real estate prices in the last year is mainly related to economic growth, increased number of deals and lower interest rates under mortgage loans.

What most influences property prices in the short term is lending and foreign demand, as well as economic growth. It is these factors that influence the price cycle. Factors like demographic factors, unemployment rate, income, etc. influence the market in the long run and set its stable development.

Question: What is the motive for a family to “invest part of their life” in a home at the present reality in Bulgaria and in Europe and around the world?

Polina Stoykova: To buy a property is one of the most important things a person does. In the context of the crisis people mainly buy properties for personal use and not as an investment. After all we have to realize that life goes on and we cannot postpone the decision to set up a home for ever.

Lately there has been talk of a lost decade in terms of the economy and this decade is only just starting. We must be clear whether we could wait 10 years for the economy to recover and only after that make the important decisions in our life.

Question: What would stimulate the property market today? Would that be possible if the asking prices were halved?

Polina Stoykova: This depends on whether we are talking about a market that satisfies the housing needs – like the markets in the big cities or whether we are talking about a holiday home which is an extra. With holiday homes in Bansko we saw how price decrease does not necessarily increase the interest nor does it lead to an increase in deals.

Question: Have property prices hit the bottom or not?

Polina Stoykova: We can’t give an explicit answer to this question until we see real estate prices going up – only then could we say that we have hit the bottom. What we can say is that the property price drop is slowing down and this year it will be about 5%.

We have expectations and we could make forecasts about the conditions at which market trends will change. However, forecasting is very difficult in the present uncertain situation.

Question: Which will be the new best areas in the capital Sofia in the next 5-10 years and why? Will some of the quarters with Soviet-style blocks in Sofia and in the other big cities turn into ghettos?

Polina Stoykova: The best areas in Sofia will be the areas around the underground stations, as well as all areas offering good infrastructure, fast access to the key points in the city and tranquil lifestyle.

As for Soviet-style blocks – they have their place on the property market and can be a great option for first-time buyers who can start climbing the property ladder from there and improve their lifestyle by buying a newly-built property.

Question: When do you expect the market to recover?

Polina Stoykova: We can expect the real estate market to start recovering when there is a convincing and stable economic growth, which means first solving the problems related to the sovereign debt crisis in Europe.

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