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Property Buyers Becoming More Active

2010-05-04   |  Banker, vol.17, 01.05.10

Lately, Bulgarian real estate agencies signal about more property enquiries and an increased interest in properties on the part of buyers. In April property agents in the three big regions in the country – Sofia, Varna and Bourgas – received an average of 18% more calls and enquiries from potential real estate buyers. However, sales still take a long time to conclude and buyers and sellers who don’t have to pay off loans are taking their time.

With regard to the potential market participants they have not changed significantly in the first quarter of 2010. The most interesting is the group of those who did not buy a property during the price peak of 2007-2008 although they had the resources. They chose to keep their money in banks or in high liquidity financial instruments and now are in the best position to take advantage of the low real estate prices. These people are expected to wait further and not become active buyers as they believe that property prices will fall further. Still, their aim is to buy a good property for less money and they will probably do it when they decide the crisis is coming to an end.

The second and the biggest group of potential participants on the real estate market are the owners of one property. They observe what has been happening, they do not intend (for now) to take part and they do not have enough cash to make an investment. Their potential to become part of the market is limited and hypothetically they could sell their property (a small apartment, for example) and buy a bigger one. To a large extent their activity depends on their access to bank lending in order to finance their purchase.

The third group of players on the market is that of the middle-size investors – owners of a few properties bought before 2009. They already know that they have made a mistake and that makes them nervous as they have missed the right moment to sell the “surplus”. Their future behavior is clear – they will try selling at prices higher than the average expecting to sell at least part of their investment properties. It depends on their need of fresh capital whether they will manage to sell – if they need money urgently they will lower the price in order to conclude a deal. Otherwise they will wait.

The last group is that of investors who staked fully on the property boom. They not only invested all their finances in property before 2009 but also have large loans secured with mortgages. Those who are hit most are those who invested in the holiday home and rural home sector. Nevertheless, these people lower the prices to sell their properties in order to repay their loans.

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DISCOUNTED PROPERTIES

BARGAIN PROPERTIES


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