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The Real Estate Market - the Positive Trend Will Continue in 2017
In 2016 we witnessed a mini boom, or more precisely - a quick deployment of the positive trends in the property market in Sofia and other big cities, which we have not seen since the good years of the previous growth cycle of the property market.
That is how 2016 will be remembered in the real estate market:
• For the first time since 2008 we measured a double-digit growth in the property prices in Sofia - the forecast shows that the year might end with a 12% price increase in Sofia. This is double the growth of last year, when we measured an increase of 6%.
• For the first time we have such a huge shortage of quality new construction to meet the highly increased demand. As a result, the new construction in Sofia and other big cities experiences rapid growth with the rapid implementation of many projects while still in the initial stage of their construction. It should be borne in mind that the increased supply will gradually balance the market as currently we observe an extremely strong construction activity and the choice for the buyers becomes larger.
The sales of residential new construction accounted for about 50% of the total sales in Sofia, and the prices offered are higher than those of the real estate on the secondary market by an average of 80-100 Euro per sq.m.
• For the first time we have an ascending market cycle, which is the result of local demand, driven by fundamental factors such as mortgage lending, economic growth, income growth, the decline in unemployment and internal migration to large cities. Having that said, we believe that the property market develops healthily and although we have indications of boom, we cannot talk about а bubble.
• In addition, this year, for the first time, 50% of transactions in the holiday market are coming from Bulgarians, ie the local search overflows in other market segments as well, which since their occurrence in 2003, have so far always been dominated by foreign buyers.
Forecast for 2017
During the next year the upturn in Sofia and other big cities will continue and again will be driven by domestic demand, as buyers will be increasingly well informed about current market trends and price levels.
The current competition between the new buildings (new start and already realised), and between them and the properties on the secondary market, will lead to a more diverse picture of the supply, which will be able to better satisfy the demand. This in turn will lead to a further increase in the sales volume. I expect the sales growth to be more significant than the increase in property prices, where the pace will slow down with the balancing of the market and will remain within 10% in 2017.
In short, next year we will have better prepared buyers, better supply and available bank financing. All this gives reasons for maintaining the uptrend.
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