The Housing Market in Sofia in Early 2023 - BULGARIAN PROPERTIES report
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.
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 per square meter, compared to 1,345 per square meter during the first quarter of 2022 and 1,550 per square meter 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.
Affordability of Housing 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 Euros/sq.m.
Zones - 1 555 Euros/sq.m.
Malinova Dolina - 1 360 Euros/sq.m.
Krastova Vada - 1 730 Euros/sq.m.
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