The housing market in Sofia in 2022 - accelerated price growth and low supply
In the first half of the year, we observed a real estate market in the Bulgarian capital, characterized by very high demand and insufficient supply. This explains both the accelerated price growth and the slowdown in sales growth.
New construction projects got off to a slower start due to rising material prices and supply difficulties, and those that were on the market were actively selling "off-plan". In addition, many property owners pulled out of the market due to high inflation, and this reduced the supply further.
At the same time, demand continued to be supported by favorable bank lending and rising incomes. Interest rates on mortgage loans continued to fall, and the volume of newly granted loans - to grow, maintaining the pace of 40% growth from 2021.
The other factors that influence the housing market also continued to have a positive impact - unemployment remained at low levels - around and below 5%, and incomes continued to grow - by around 10% on average for the country and 12% for Sofia in the first quarter according to NSI data.
The war and inflation gave an additional stimulus to the demand for investment in a safe asset, such as real estate, and the market felt a housing shortage not only in Sofia, but also throughout Bulgaria. The supply that existed on the secondary market, even in holiday resorts and in the countryside, has greatly diminished and the offers that do come to market now often sell out in a matter of days.
All this has led to an accelerating price growth, which according to BULGARIAN PROPERTIES data reached 21% in Sofia in Q2 of 2022. This represents the fastest increase since 2008.
BULGARIAN PROPERTIES' calculations based on data from the Registry Agency show that property transactions in Bulgaria in Q2 grew by only 4.3% compared to the same period in 2021. This comes after a growth of around 30% in 2021 and by about 10% in the first quarter of 2022.
There is also a slowdown in the growth rate of transaction volume in Sofia, where a growth of only 0.28% on an annual basis was registered after a 30 percent increase in 2021.
These figures reflect both the slight cooling of interest due to rising prices and - to a much greater extent - the main trend we outline for the period and which we consider to be leading - insufficient supply to meet the available demand.
Average prices and preferred housing in Sofia
According to BULGARIAN PROPERTIES data, the average price of apartments purchased in Sofia in Q2 is 1,425 Euros/sq.m. – a rise from 1,345 Euros/sq.m. in the first quarter and 1,175 euros/sq.m. a year earlier – in Q2 of 2021.
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