The Residential Property Market Will Recover in 2011 the Earliest
Currently there is a downward trend on the residential property market which can be expected to reverse and result in a new price increase in 2011 at the earliest. This is the opinion of economists, real estate agents and big developers. Their pessimism is based on the predicted recession and the forecasts of a difficult economic situation in Bulgaria in the next couple of years.
How the property market recovers depends on how the economy will develop, comments Krassimir Katev, partner in Avrora Capital Fund. According to him the most worrying thing is the recession forecasted by the International Monetary Fund during this and next year which will lead to economic insecurity, high unemployment rate and decreasing consumption. All this will also have an impact on the residential property market which had its peak during the years when the economy and incomes were on the rise. The manager of Lindner Immobilien Rosen Plevneliev also thinks that until the economy comes out of the recession we cannot expect the residential property market to recover. According to him this will happen in 2011 at the earliest having in mind that traditionally the processes reach Bulgaria much later than the developed countries. From an economic point of view, if a miracle takes place and we start absorbing the European funds and more western companies start outsourcing their activity to Bulgaria then by the end of 2010 we might reach the bottom and the economy might start recovering. However, this will be a long process, Mr. Plevneliev adds.
On this background the forecasts for the next few months are not optimistic. Observers warn developers not to count on the stir in the US economy. Sellers hear positive news from the US and believe that the market is recovering and keep the selling prices high. However, this is a false belief, warned the Managing Director of Bulgarian Properties agency Mihail Chobanov. According to Milen Markov of Galaxy Property the most difficult time for the property market will be in the beginning of the autumn. The reason for that is the combination of a few factors – the elections will have passed, after the seasonal employment in the summer the unemployment rate will increase, the companies’ results for the first three quarters of the year will have come out and there will be a clearer picture of the country’s economy. This according to him will lead to a slowdown on the market and to fewer deals.
On the topic of the property price decrease the real estate agents are fairly unanimous. According to Mihail Chobanov of Bulgarian Properties there is still no mass falling of prices. The same is the opinion of RE/MAX manager Ilian Nikolov, according to whom this will happen in the fall as the prices of more quality and prestige properties will remain higher.
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