23.04.2015 The Property Market in Sofia - Q1 2015

‘A strong property market in Sofia in Q1 – this is the shared expert opinion about the market, which has now also been confirmed by all the indicators we monitor’ – this is how Polina Stoykova MRICS, Managing Director & Head of Research of BULGARIAN PROPERTIES comments on the dynamics of the property market during the first months of 2015.

‘Some of the key trends are: an increased number completed sales, a greater appetite for properties for investment and rental return; an increased interest towards new construction which is getting more and more competitive to the resale properties, as well as a tendency for a slight increase of the property prices in Sofia of up to 5%’, adds Stoykova.

Increased number of sales

The calculations of BULGARIAN PROPERTIES based on data by National Registry Agency for Q1 show that there is a record-high increase in the number of sales of 31% on a yearly basis. The number of registered sales in Sofia in Q1 is 4,805, compared to 3,668 for the same period in 2014. Such a high number of sales in Q1 hasn’t been seen in any year since the beginning of the crisis.

Average Prices

According to the data of BULGARIAN PROPERTIES, during the first quarter of the year the average property price of sold apartments in Sofia is 771 €/sq.m. compared to 764 €/sq.m. for Q4 of 2014 and 730 €/sq.m. for Q1 of 2014. The average listing price for Q1 of 2015 is 880 €/sq.m. compared to 860 €/sq.m. for 2014. It can be seen that there is a positive trend in both the listing prices and the prices of real deals by 2-5%, which was expected after the strong second part of 2014.
Discounts from the asking prices decrease and for the first quarter they were around 2-3% compared to 4-6% on average for 2014.

During the last few months we can see an extraordinary activity in the low-cost segment and demand for properties that are up to 50,000 – 55,000 € that are bought for living and as an investment. Such properties are very liquid at present and many of them get sold within days.

Characteristics of the purchased properties

The number of bought 1-bedroom apartments is slightly bigger than 2-bedroom ones. The former have a 45% share of the total number of sales and the latter – 40% share. The rest of the sales are distributed among studios, large apartments and houses. The average area of the sold apartments is 74 sq.m.

Districts like Mladost, Vitosha, Manastirski livadi and Boyana have the highest number of property sales, but in all other districts of Sofia an increased activity can be seen. More often it happens that the buyers search for a property in one area but end up buying in another because they find a property that satisfies their requirements.

70% of the bought properties are in brick buildings, while the panel-built and sliding shuttering ones have 15% each of the total number of deals for the first months of the year. 50% of the apartments sold have central heating.

Average stay on the market

Properties in Sofia tend to get sold quicker in Q1. The data of BULGARIAN PROPERTIES show that the average stay on the market in Q1 is 80 days, compared to 91 and 96 respectively for Q4 and Q3 of 2014. Here you can see how the average stay on the market has changed during the last few years, based on data from BULGARIAN PROPERTIES:
• 2014 – 104 days – around 3.5 months
• 2013 – 97 days – a bit over 3 months
• 2012 – 121 days – around 4 months

Based on this data we can conclude that the realistic time it takes to sell a property, when it is correctly priced, is 3 to 4 months. A crucial factor in order to make a sale in such a period though is the asking price. The characteristics of each property have to be accounted for when defining the asking price, as well as the prices of competitive properties. Some of the most important characteristics that have to be accounted for when defining the asking price are: location, area of the property, construction type, year built, floor, prospect, as well as the condition of the common areas of the building.

Trends and perspectives

It seems that 2015 will be a turning point for the city property markets in Bulgaria. There are still attractive offers on the market, low prices, the number of sales is going up and as a whole the trends are positive. More and more people decide to make their purchases now.

However, it has to be pointed out that the supply of good-quality offers and realistically priced properties, based on their characteristics, are depleting. In the last few months, a mismatch between buyers’ and sellers’ perceptions about property prices has started appearing. There are too high expectation in both the buyers and the sellers. Looking at the positive trend in the city property markets during the last 1-2 years and the fact that the supply of good-quality offers is decreasing, the sellers became overoptimistic about the price that they can get from their properties. At the same time, byers aren’t ready to pay any price, and a lot of them still think that the property market is in a crisis. This imbalance in the expectations of sellers and buyers is starting to redirect the interest towards new construction and the new projects on the market.
Now the moment is very good for a massive penetration of construction companies with new projects for residential properties and house complexes. Undoubtedly this process is happening at a high speed now, based on the statistics for the significant increase in the number of issued building permits. It is the new construction that will balance the city property markets and will help the demand meet the respective supply of quality properties at prices that the buyers are ready to pay.

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Copyright: 2015 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. and the Author cannot be held responsible for loss or damage as a result of decisions made based on the information presented in this article.
© Bulgarian Properties Ltd. 2015.

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