Bulgarian housing prices up 22% Jan-Sept 07

Nation-wide housing prices jumped 22% in January-September 2007 to around 1,120 levs, shows data released by Bulgaria's statistical authority on Tuesday.

The biggest spike - over 45%, was registered in the city of VIDIN, North-western Bulgaria, followed by Sofia with 34%.

The price increase recorded by the statisticians in the first nine months has already beaten the forecasts for a full-year gain of 15% made by realtors in early 2007.

The residential market in Vidin also posted the biggest price increase in Q3 with 20%, followed by Sofia with 15% and Blagoevgrad with 12%.

The latest gains reinstate SOFIA as the nation's most expensive housing market with an average price of close to 2,000 levs/sq m. It leapfrogs VARNA, taking a lead of more than 150 levs/sq m on average over homes in the coastal city which was consistently pipping the capital, albeit fractionally, over the past two years.

The realtors explained the surge with the fact that, in an overwhelming number of cases, the full price of the property transactions is being reported to the registry offices.

Over 80% of the residential market is loan-financed and the banks prefer to have on paper the real price of the property, said Lyubomir Stanimirov.

Rising inflation and food prices act as an additional incentive for people to invest in the real estate market, said Hristo Boikov.

Driving the pricing upside is the new construction segment which recorded the biggest hike, said Stanimirov.

Residential districts like Manastirski Livadi, Malinova Dolina, Studentski Grad and Vitosha, where over 70% of the supply is new construction, are at the center of the trend. Asking prices in these neighborhoods have zoomed up from 800 euro/sq m at the beginning of the year to 1,200 euro/sq m, said Stanimirov.

The explanation for the price gains in Vidin has to do with the launched construction of a new cross-Danube bridge and the big number of residents of area villages that have sold land to the developers of logistics and business parks and now invest in urban homes.

The market in Ruse, also on the Danube, is benefiting from an influx of cash from Romanian home buyers, said Boikov.

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