Overview of the Bulgarian Real Estate Market for 2000-2010

With the end of the first decade of the new century BULGARIAN PROPERTIES drew up the first of its kind for Bulgaria analysis of the property market for the period 2000-2010.
The research is based on the data of the National Statistical Institute (NSI), it being the most comprehensive existing statistics of property prices. This information is relative only to residential properties – apartments in regional cities around the country. Even though it doesn’t include holiday properties, rural houses, plots of land and commercial properties it is comprehensive enough to show the main market trends and the directions in which the market developed. The housing fund data and the issued building permits also come from the NSI and the data about the number of sales come from the Registry Agency.

The main highlights of the analysis are as follows:

• Accumulated nominal increase of average prices of apartments in the regional cities for the last 10 years - 201.66%; for Sofia and Varna the increase is 171.13% and 237.53% respectively
• Accumulated nominal decrease of prices compared to the peak values in the third quarter of 2008 until the last quarter of 2010 - 33.31% on average for the country, for Sofia - 36.6%
• Accumulated actual increase (after deducting inflation) of prices of apartments in the regional cities in the last 10 years + 68.76%; for Sofia and Varna the increase is 51.68% and 88.83% respectively
• Accumulated actual decrease (after deducting inflation) compared to the peak values in the third quarter of 2008 until the last quarter of 2010 - 36.6%; for Sofia - 39.7%
• Average annual increase of apartment prices in the country in the past 10 years +11.65%; for Sofia and Varna +10.48% and +12.95% respectively
• Decrease in the number of property sales in the regional cities by 54% compared to the peak value in 2007;
• Decrease in the number of issued permits for building new residential buildings compared to its peak in 2007 by 56%
• 3.94% increase in the number of residential units in the cities in the period 2004 – 2009; in Sofia the increase is by 2.59% and in Varna by 7.72%.

I. Average prices and increase of apartment prices through the years

- nominal growth

In the period 2000-2008 prices of apartments continuously increased as the peak in their value was reached in the third quarter of 2008 followed by a plummeting in the number of deals and in property prices in the next 2 years. The highest prices of apartments were reached in Sofia and Varna, as in Varna the price decrease was more gradual and at the moment the price per sq.m. in the two biggest cities in the country is almost the same – the average price per sq.m. in Sofia in 2010 (1,568.81 BGN or about 802 EUR) is only 11 BGN (about 5 EUR) less than that in Varna – 1,579.03 BGN or about 807 EUR. The accumulated nominal decrease of property prices in the third quarter of 2008 until the last quarter of 2010 is 33.31% on average for the country and 36.6% for Sofia.

The towns with the biggest increase in property prices in the last 10 years are as follows:

• Silistra – 330.94%
• Targovishte – 310.48%
• Kardzhali – 309.28%

An explanation for the big price increase in these towns should be sought in the fact that prices of properties there were very low in 2000 – starting from about 150 BGN/sq.m. (about 77 EUR/sq.m.) and in the next years they compensated with a bigger increase in order to catch up with the average prices around the country.


- actual price increase

When talking about increase in prices we should also take into consideration the inflation. That is why we deflate current property prices with the harmonized index of consumer prices (HICP) in order to follow the actual increase of real estate prices. Here is the data after deducting the inflation.

In general, prices of apartments around the country have increased by 68.76% for the period 2000 – 2010. Even after the price drop we have a positive actual increase in their value.

The biggest actual increase is to be found in Varna – 88.83% and for Sofia this increase is 51.68%. The accumulated actual decrease in prices after deducting inflation starting from the price peak in the third quarter of 2008 until the last quarter of 2010 is 36.6% (on average for the country) and for Sofia it is 39.7%.

From a zero increase in the beginning of the decade (even reporting a decrease after deducting inflation), 2003 saw a two-digit increase of the prices year-on-year, which reached its peak value in 2004 - 47.48% nominally and 38.94% after deducting the inflation. In 2005 the increase continued to be considerable but in 2006 it slowed down to 14.7% nominally and 6.78% after deducting the inflation. This means that in 2006 there was a slowdown in the increase in apartment prices (there still was an increase but it was slower compared to the previous two years).

What followed are two years of price decrease – of about 22% and 10% nominally in 2009 and 2010 respectively. The actual decrease of apartment prices after deducting the inflation for these two years is 23.26% and 12.75% respectively. This means that although price decrease slowed down in 2010 the price increase is still in the negative zone of the graph. The trend of coming out of the negative and going to positive growth is obvious and our company forecast this growth to start at the end of 2011 if there are no economic shocks and there is positive economic development.

II. Number of property deals in the regional cities

Sales volumes are an extremely important indicator of the trends on the property market as they give early signals for weakening or strengthening of the market and therefore of property prices.

The highest number of sales was realized in 2007 after which in 2008 sales volumes decreased by 5.34% compared to the peak volumes in 2007; in 2009 the year-on-year decrease is -37.16% and in 2010 the decrease in the concluded deals in the regional cities slows down to -7.15%. The accumulated decrease in the sales volumes in the regional cities compared their peak in 2007 is -45%.

III. Issued permits for building of new buildings and housing fund

The NSI started this statistics in 2005 and it follows the issued building permits around the whole country.

The data show that the peak in the number of issued building permits for residential buildings was in 2007 (as well as in the sales volumes), after which the number of building permits drops. The decrease from the peak in 2007 until 2010 is 56%.

The NSI data of the housing fund in the country show that residential properties in the country have increased by 2.26% for the period 2004 – 2009 inclusive. The number of residential properties in the cities has increased by 3.94%, while in the villages they have dropped by 0.56%. The increase in the housing fund in the capital Sofia is 2.59%.

If you wish to receive on your e-mail the full analysis of the property market in Bulgaria in the period 2000-2010 click here

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Copyright: 2011 Bulgarian Properties Ltd. All rights reserved. For further information or advice please contact us on tel: +359 2 9 11 50 or e-mail: info@bulgarianproperties.com. The use of this article by third parties is allowed only with proper quotations of the source www.BulgarianProperties.com and the Author of the article. The data in this material has been collected by the Author and Bulgarian Properties Ltd. and is presented for information purposes only. We have made every effort to ensure the accuracy of the data. However, Bulgarian Properties Ltd. cannot be held responsible for loss or damage as a result of decisions made based on this article.
© Bulgarian Properties Ltd. 2011.

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