Sofia Property Prices Continue to Fall - November 2009

It has already been a year since the Bulgarian real estate market was officially hit by the crisis. October 2008 was the last active month before the crisis brought half a year of decrease in the number of deals on the real estate market followed by a decrease in prices.

Here are the latest data of BULGARIAN PROPERTIES* about the current state of the market a year after the beginning of the crisis:

• 35% decrease in the number of concluded deals in the country in October 2009 compared to October 2008.
• 40% decrease in the number of deals for the first ten months of 2009 compared to the same period in 2008.
• 38.5% decrease in the average price of concluded deals with residential properties in Sofia in 2009 compared to 2008.
• 30% decrease in the rental prices of commercial properties (offices and shops) in Sofia and Varna.
• Over 50% decrease in the prices of Bansko apartments.
• 53% decrease in the average price of rural properties around the country.
• An increasing number of offers with discounted prices

*The data is based on actual concluded deals and offers for sale and rent of BULGARIAN PROPERTIES

October has always been the most active month on the real estate market from the last quarter of the year as well as one of the most successful months during the year. The overall activity on the market in October 2009 was 31% higher compared to September 2009 regarding realized deals making it the second most active month in 2009 after June.

Residential Properties in Sofia

The main driver of the market in October was the deals with Sofia properties. The deals concluded in October in Sofia are at 750 to 900 Euro/sq.m. or a total of between 55,000 and 65,000 Euro.

The price decrease in Sofia based on BULGARIAN PROEPRTIES’ actual concluded deals is about 24% compared to the first quarter of the year. In the first quarter of 2009 Sofia apartments were sold at an average of 1,050 Euro/sq.m., in the second quarter – at 1,020 Euro/sq.m., in the third quarter – at 950 Euro/sq.m. and in October the average price was about 800 Euro/sq.m. This data shows that the greatest fall in property prices in Sofia was in the months after June. In 2008 apartments in Sofia were sold at an average price of 96,200 Euro and by October 2009 inclusive they were sold at an average price of 59,100 Euro.

The residential rental market in Sofia also underwent price corrections. In October 2008 the average rental price in Sofia based on realized deals was 670 Euro. A year later, in October 2009, the average rental price in Sofia based on realized deals by BULGARIAN PROPERTIES is 480 Euro (28% decrease) and now there are more rental offers for under 300 Euro.

In the last two months there are already deals concluded in Varna as before that the market was at a standstill.

Trends in 2009

Since May sellers have been decreasing their offer prices more openly, because they already understand that property prices have really gone down. The trend for a decrease in offer prices can also be followed from the weekly latest ads newsletters of BULGARIAN PROPERTIES where apart from the newly published offers there are such whose prices have been discounted during the respective week. In the last couple of months the number of offers with discounted prices is almost the same as that of the newly published ones. This trend will continue as the offer prices and the prices at which deals are concluded differ.

The properties purchased in 2009 are mainly for personal use – a first home, changing the current home for a better one, a first holiday home in a ski or seaside resort or a rural house. Rarely were there clients buying only for investment purposes because the market conditions are not favorable for such deals. Nevertheless, it is good to know that investment in property should be seen as a mid to long-term investment and in this aspect properties are a good means to preserve the value of the money. If a household has resources then it would be wise this resource to be divided between different assets including property. One should only act rationally and make the best possible choice.

Through the years, November and December are statistically the months with less realized deals when the already begun deals are concluded (with the exclusion of 2006 before Bulgaria’s EU accession). It is yet to be seen whether this will be applicable during the crisis. More and more of the buyers who were waiting to see what will happen to the market in 2009 already believe that the time to make a choice has come. Now the market offers lucrative deals and it is time all the interested parties started looking actively for the property that will suit their needs.

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Copyright: 2009 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. 2009.