Overview of the Bulgarian property market in 2012 and forecast for 2013

Property market over the past 2 years
In the first half of 2011 the Bulgarian real estate market made an attempt to pass into a recovery phase, influenced by the beginning at that time economic growth and the prospects for the economy’s coming out of the crisis. However, these first attempts were overshadowed by the deepening of the debt crisis in Europe and accompanying negative economic trends, which intensified in the second half of 2011. As a result, the real estate market came back to a crisis mode, led to a trend of decrease in the number of concluded deals by mid-2012.

New in 2012
In the second half of 2012 we witnessed more positivity, fading away in the drop of property prices and more concluded deals with holiday homes, mainly in the Bulgarian beach resorts.

The positivity in 2012 had radically different character than that at the beginning of 2011. Unlike 2011, when the positive trends were a result of an increased economic activity and better prospects for the local buyers, in 2012 the development of the Bulgarian property market in a positive direction was determined primarily by the growing foreign interest and purchases of properties by Russian buyers.

Although 2012 was generally a difficult year, the Bulgarian property market made the following positive changes that are very important and will support its development in the coming years:
• Overall price stabilization and beginning of the market recovery from the crisis.
• Increase in foreign demand, which happens for the first time in such a tangible scale since the beginning of the crisis and as a result there are:
- Rise in sales of beach vacation apartments;
- Growth in interest towards rural properties;
- Starting price stabilization in the winter resorts.

Unlike the holiday property segment, the real estate market in the major cities driven mainly by Bulgarian buyers lagged behind the optimistic trends in holiday property segment. For the city properties 2012 brought prices stabilization and good supply, but unfortunately, this could not outweigh the concerns of buyers about their jobs and income. Accordingly, deals with city properties remain under pressure from the crisis sentiments and the slow economic growth, which did not exceed 1% in 2012.

Forecast for 2013
The demand for city properties will continue to be dominated by Bulgarian buyers and will depend on the economic recovery, unemployment rate, household income and access to bank loans. Unfortunately, the economic forecasts for 2013 are similar to macroeconomic indicators reported in 2012 and we cannot expect a substantial change in trends on the property market next year. However, it is important that price falls are already fading away and if the economic environment is stable in 2013, prices will remain at 2012 levels.

In recent months, a factor of a more individual origin is gaining strength which returns many buyers (especially first-time buyers) to the market. This factor is the desire and willingness of the first-time buyers to finally make the step and buy a home - a decision which has been delayed for more than four years now and which cannot be delayed too long as life is going on despite the crisis, and everyone has to move on. This desire for a better standard of life and success in endeavours, combined with good prices that the market offers will activate the city market to a certain extent in 2013.

As for vacation properties, the interest from Russian buyers will remain and continue to grow in 2013, which will import market optimism. This optimism will gradually spread to other market segments that will inevitably feel the positive impact of increased foreign interest and inflow of fresh funds. We can say that 2013 for the holiday properties will be again a year of Russian buyers. They are already very well informed buyers, keen to acquire second home in Bulgaria, but not at any price and after a thorough market research.

Adequate pricing of properties based on their characteristics will continue to be leading for the sale of a property and buyers will continue searching for quality and budget-oriented properties in 2013.

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