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The Housing Market in Sofia in Early 2023 - A New Balance Amid Active Demand and Better Supply

2023-04-28   |  Polina Stoykova MRICS, Managing Director and Head of Research of BULGARIAN PROPERTIES


In the first days of 2023, the housing market showed great activity, which gave early indications of a positive start to the new year. We already have the first data that confirms these observations.

Real estate prices continue to rise, but the growth is slowing down. Our expectations are that this slowdown will become more pronounced in the second half of the year, as there was a more significant increase recorded during the last year.

Supply is also increasing this year, which gives a better balance to the market. Data from BULGARIAN PROPERTIES shows that new property listings are up by around 10% compared to the same period in 2022. This is the first increase since 2019, as the first quarter of 2020 was marked by the pandemic and limited business activity, and then the available supply quickly began to run out. The properties that were being put on the market could not satisfy the growing demand and keep up with the pace of sales.

The volumes of newly granted mortgage loans are also increasing. According to data from the Bulgarian National Bank, after a slowdown at the end of 2022, in the first months of 2023, loan volumes have increased by around 15% compared to the previous year and are returning to growth levels from the past 2 years of high demand and a strong housing market. This is one of the most important factors driving the market, and its impact has so far remained positive.


Expectations for an increase in interest rates on loans have not been justified for Bulgaria yet. The increases have remained minimal - within 0.06 p.p. for loans in Bulgarian Lev, which make up 98% of the granted loans, and this has given buyers confidence to continue with their plans to purchase their new homes.


The other macroeconomic factors that affect the housing market continue to have a positive impact - unemployment is below 4%, and incomes continue to rise - on average by around 17% at the end of 2022 according to the National Statistical Institute. Thus, although incomes are growing at a slightly slower pace than prices, they maintain a stable price-to-income ratio, which gives us the affordability of housing.

Inflation continues to be a significant factor for increased investment in real estate, especially against the backdrop of continuing zero interest rates on deposits and limited alternatives for safe investment.

All of this leads to a positive outlook for the Bulgarian housing market in 2023.

Average prices and price growth in Sofia

The average price of properties purchased in Sofia during the first quarter of 2023, according to BULGARIAN PROPERTIES, was 1,545 €/sq.m., compared to 1,345 €/sq.m. during the first quarter of 2022 and 1,550 €/sq.m. at the end of 2022. This represents a nearly 15% year-on-year increase and a flat quarter-on-quarter level.


Previous year-on-year increases were between 22-23%. It appears that the current growth rate is slowing down, but it is still significant.

After adjusting for inflation, the real growth rate is only 1.3% on an annual basis, which is the lowest level since 2020.


Based on these figures, one could conclude that prices in Sofia have reached their peak and are moving largely due to inflation. Its slowdown contributes to the expected deceleration in housing price growth.

Over the past three years, the square meter in the Bulgarian capital has increased by almost 40%. The biggest increases in prices were registered in late 2021 and throughout 2022, with growth accelerating throughout 2022 and reaching 23% at the end of the year.

The average overall price of purchased apartments during the first quarter increased to €132,800 from an average of €115,500 in 2022. This indicates that market demand has shifted towards larger apartments from the more prefered 1-bed apartment purchases last year.

Sales Volume

BULGARIAN PROPERTIES' calculations based on data from the Registry Agency show that real estate transactions in Sofia decreased by 12.2% in the first quarter. This is the third consecutive quarter in which the Registry Agency has reported a decline in transaction volumes in the Bulgarian capital. However, we can see that the pace of decline has slowed down from 15-17% in the second half of 2022 to around 12% at the beginning of this year.

In the first quarter, 6,381 transactions were registered, compared to 7,268 in 2022 and 6,683 in 2021. The number is higher than that of Q1 in 2019 and 2020.

BULGARIAN PROPERTIES' data show a much smaller decline in sales volumes in Sofia during the first few months of the year, at less than 5%. This can be explained by the active market for new construction, where transactions are registered at a later stage after building is completed.

Our observations indicate that, given the current state of the market and available demand, the recorded declines in sales volume may be compensated even within the second quarter.

Housing Affordability in Sofia

Data on the average monthly salary from the National Statistical Institute (NSI) are released later, and there is still no data for the first quarter of 2023. The accessibility coefficient of BULGARIAN PROPERTIES decreased from 1.2 to 1.12 at the end of 2022, indicating an improvement in the accessibility of housing in the capital. Incomes managed to catch up at the end of the year and improve the price-to-income ratio.


The average monthly salary in Sofia reached BGN 2,704 in the last quarter of 2022. Therefore, to purchase 1 sq. m. of residential space in Sofia at the end of last year, around 1.12 average monthly salaries in Sofia were needed. For comparison, in 2008 (the previous market peak), 3.4 salaries were required for the same area.

Preferred neighborhoods and property prices in them

In 2023, the most preferred neighborhoods remain those in the broad center of Sofia, such as Banishora and Zonite, as well as Malinova Dolina, where the construction of a number of new complexes and buildings is taking place.

The average prices in the most popular neighborhoods in the first quarter of 2023 based on actual transactions were:

• Banishora - 1 470 €/sq.m.
• Zones - 1 555 €/sq.m.
• Malinova Dolina - 1 360 €/sq.m.
• Krastova Vada - 1 730 €/sq.m.

Parameters of purchased properties and average stay on the market

Currently, both buyers with investment purposes and those looking for their own use are active on the market, relying heavily on mortgage financing and encouraged by the weak growth of interest rates on housing loans, good employment rates, income growth, and so on.


The share of purchased 2-bedroom apartments has increased to 42% - almost equal to that of 1-bed apartments. These levels are similar to those of 2020-2021, with the exception of 2022 when deals for 1-bed apartments reached 70% of the overall housing market and were mainly driven by investment intentions for savings preservation or quick resale. In this sense, 2023 shows an improved market balance and a return of the main drivers for more sustainable growth, namely buyers for personal use.

The stay of properties on the market continues to be short, with deals often being made in a matter of days. This shows that the market is still a seller's market. However, there is a greater willingness for negotiation and small discounts from listing prices.

Conclusions and Perspectives

From the data presented, we can conclude that in 2023, the housing market in Sofia is better balanced in terms of supply and demand. Sellers are more flexible in negotiations, as they understand that prices have reached their peak and there are several factors that threaten the positive development of the market, making the moment excellent for closing a deal.

Buyers are more diverse in profile, and a large share of them are buyers looking for their own home. They are supported by still favorable bank financing, low unemployment rates, and rising incomes.

This makes the housing market quite resilient and brings optimism for its positive development this year.

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