The housing market in Bulgaria in 2021/2022 - overview and forecast

Record sales volumes, strong demand, exceeding supply and accelerating price growth - this is how we can briefly describe the housing market in 2021. Today we have prepared a summary and forecast of what to expect in the new year.

2021 - summary and key points

In 2021, the real estate market in Bulgaria entered the new decade confidently and with very fast steps. It set a new stage in the market development, a new upward cycle that is expected to unfold over the next few years.

The trends that began after the pandemic unfolded and in 2021 the housing market continued to attract buyers for their own use and living in a better environment, in more spacious and bright homes. This determined the continuing demand for larger apartments, and new construction remained most preferred. Banks supported the strong demand with low interest rates on mortgages, and income growth and stable employment levels gave additional confidence to buyers.

At the same time, the market managed to attract investors' attention in terms of secure investment and this has led to the return of buyers looking to invest in the real estate. Rising inflation, zero interest rates on deposits and high fees imposed by banks have further accelerated this process. At the same time, however, they acted in the direction of reducing supply due to lack of alternative investment after the sale of a property, as well as due to rising prices of construction materials, which delayed new projects.

Prices in Sofia increased by about 10% on an annual basis. The same goes for the other big cities. In the beach and mountain resorts the growth is between 3 and 7%.

In summary for 2021 - the market managed to attract active buyers from the two main groups - for personal use and for investment. This led to a bigger than expected growth in sales and prices. A direct consequence of the high demand for real estate across the country is the quick absorption of supply and the need for a new one, which the market must provide in 2022.

What's next in 2022?

In this year too, demand will continue to be high and it will have to be met by a higher supply. We are already seeing more property offers on the market, as well as launching of new development projects.

Demand will continue to be stimulated by both the need for own housing and the desire to invest in a secure asset in order to find protection against inflation and other risks ahead, as well as the reluctance of banks to keep large deposits and penalize them by high fees.

The economic recovery will continue. Although tackling the pandemic today seems increasingly uncertain, and the consequences of Omicron's entry are difficult to assess, expectations are for continued economic recovery and a return to the levels we would have had in the absence of the pandemic. This will lead to a further increase in income and investment and will generally affect the activity of the real estate market in a positive direction.

Banks continue to keep record low interest rates on housing loans, and even if there is some increase at the end of the year, it will not be such that will significantly affect demand.

As a result of these factors, my expectations are that house prices will continue to rise by about 10% this year as well. Subsequently, there may be some slowdown, but overall prospects for the development of the real estate market in Bulgaria remain positive in the next few years.

Which are the top neighbourhoods for investment in Sofia in 2022

During this and the following years we will pay special attention to the area of ​​the wider center of the capital, including neighbourhoods such as Zone B-5, Zone B-18 and 19 and Banishora, as well as other areas bordering the central parts of Sofia and are their natural continuation.

There are available sites for construction and the implementation of large-scale projects has already begun, This has proven to change the urban environment and increase the attractiveness of these areas.

In addition to proximity to the top center, these areas have the advantages of available transport and infrastructure, schools and kindergartens, shops and all amenities. And the new projects will bring the much-needed modern living environment.

Together with the central parts, the already established Southern and Eastern areas of the Bulgarian capital will continue to be most preferred. As well as the developing area around IKEA and Sofia Ring Mall.

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