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The Property Market Is Similar to That in 2009

Imam Imot Magazine, September 2010

Imam Imot magazine published an article about the Bulgarian property market in the summer. According to some of the property experts the market is slightly more dynamic compared to previous months. The data of the Registry Agency show an increase in the number of sales in the second quarter of 2010 compared to the first – from about 28,000 to over 40,000. However, the volume of these deals is less compared to the same periods in 2009.

Here is how Polina Stoykova – the Chief Operations Manager of BULGARIAN PROPERTIES – answered the questions of Imam Imot:

1. How did the property market develop in the traditionally strongest summer months? Is there an increase in the number of deals compared to the first months of 2010 (both for sales and rents)?

After the very dynamic March and April and after the collapse in the number of deals in May the sales in June, July and August returned to levels close to the same period in 2009. In July and August there was a slight increase in deals of about 15% compared to the same period in 2009.

However, the sales in the last 3 months did not manage to reach their highest levels since the beginning of the crisis, which BULGARIAN PROPERTIES reached in March and April 2010. This means that the market remains at the same levels as in 2009 and there is no development or a signal for a lasting increase in dynamics.

Property sales in Sofia have increased compared to the summer of 2009 as average prices based on the concluded deals are about 850 EUR/sq.m.

In the last couple of months the market in the regional cities like Bourgas, Plovdiv, Veliko Tarnovo, etc. is becoming more active. These markets were stagnated since the beginning of the crisis and sales were made mainly in the capital Sofia. Apartment deals in these cities are concluded between 25,000 and 40,000 Euro, at an average price of about 500-600 EUR/sq.m.

Deals in the summer resorts usually increase in summer. This year there is a slight increase in the sales of about 15% along the southern and northern Black Sea coast. Buyers continue to be interested in apartments at low prices – between 20,000 and 40,000 Euro. We organize viewing trips on a daily basis but buyers are still indecisive and view many properties before choosing, i.e. deals are concluded after a lengthy research.

There is less interest in rural properties and a decrease of about 20% in the number of realized deals since July compare to the same period in 2009.

The trend of 5-10% of the deals to fall through after the payment of the deposit continues due to financial inability of the buyers to continue with the deal. This trend is true around the country and for different property types. At some moment buyers decide it is better for them to withdraw from the deal.

2. What are the differences compared to previous years?

The differences are in a more active market in Sofia in the summer, a slower rural property market and more sales in the smaller towns. However, as a whole the trend June to be the strongest month on the market followed by a slight drop in the number of sales in July and August continues to be valid.

3. After the banks returned to the mortgage market and the economy is showing signs of a possible improvement how and when would this reflect on the property market? What are your expectations for the months until the end of 2010?

It is still difficult to receive a mortgage and they are given only for particular properties. After the more active June there was a slight increase of the interest rates of the mortgages. People still don’t feel secure in their future and financial stability and refrain from taking bigger mortgages. Even though the banks’ offers are more lucrative now and house prices dropped considerably people continue to wait and take mortgage loans only if financially stable.

Until buyers become more decisive and sure in their future property offers and mortgage offers will continue to be only that – offers. No big change is expected on the property market this year. October is expected to be the next most active month until the end of the year. It is apparent that we are in a period of waiting for economic news and signals about where the Bulgarian and the European economies are heading. This is also to be seen in many other countries around the world – quite a lot of hesitation showing that the trust in the economies has not been restored.

4. Is there a more evident change in some of the market segments and if yes in which? What is this change?

There is no evident change in the various market segments, there is more of a standstill on the market with some slight short-term fluctuations for the various types of properties.

5. Is the price drop still continuing? What can we expect in the next few months – small fluctuations or a slow growth?

It is still not time to talk about price growth. At the moment prices remain at the same levels as at the end of 2009. The actual question is how long can the market move with such a volume of deals and will there be a second price decrease to awaken the interest in property deals. In this connection all players on the market are waiting for economic news to help them make their decision. If the timid economy recovery continues there might be an increase in the number of property deals. However, if we go into another period of decrease before the true recovery it is very possible that we also undergo a second cycle of property price decrease.

6. Has the negative trend in the holiday home sector changed? Is the interest in them increasing?

The interest in the holiday home sector returned partially in the summer of 2009 due to the considerably lower prices. Since then prices have remained the same and the same goes for the number of concluded deals. There is no significant change in the buyers’ interest – what they look for is finished properties in working developments of high quality, even furnished, at prices between 20,000 and 40,000 Euro.

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