07.07.2010 Analysis of BULGARIAN PROPERTIES for 2Q 2010: Property Price Drop Slowing Down

Polina Stoykova, Chief Operations Manager, BULGARIAN PROPERTIES

In the second quarter of 2010 the Bulgarian property market gave very different signals. After 6 months of stable number of deals the month of March witnessed an increase in the deals and there was optimism that this is the beginning of the end of the crisis. The increase in the number of deals continued all through April as BULGARIAN PROPERTIES registered record sales since the beginning of the crisis. However, after that about 10% of the buyers who had signed preliminary agreements for purchasing a property decided to back out of the deal resulting from the lack of finances and an increased insecurity regarding their financial situation.

May was a very slow month with a 60% drop in the number of deals around the country compared to April. In June sales returned to levels close to those from March and April but also close to June 2009 which was one of the best months for the real estate market last year.

This market situation is very different from what has been happening on the market during each of the previous months and this makes us think that the recovery will not be as stable and as smooth as we forecasted earlier. The next few months will be of key importance for the direction in which the market will move until the end of the year.

For already a year now the property market shows similar activity, it stays at one level and does not develop. The only sign of progress was when prices decreased in 2009. The first two quarters of 2010 also give different signals – decrease of the asking prices and the prices of the actual concluded deals in the first quarter and then a return to the 2009 levels of asking prices and prices of the actual concluded deals in the second quarter. This means that in terms of activity and prices the market is in the same position in which it was last year.

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