The real estate market in Bulgaria is at its peak in every respect – a record number of transactions is expected for the last decade in 2021, the upper threshold of house prices (in the capital) is already chasing 200,000 euros, and the volume of distributed mortgages are getting bigger. At first glance, this seems to be the perfect situation for all market participants – investors sell off their projects before the first sod, agencies report high turnover, buyers are confident because of rising prices, and banks register high levels of new business, even at low interest rates.
In the economy, however, there is never a movement only upwards (as well as only downwards), but cycles that mark the two lowest or highest points in the development of a market. And without wanting to be pessimistic, Money.bg decided to recall the last time the trend reversed and the real estate market from extremely attractive to toxic – like any market that begins to incur solid losses. For this purpose, we dug up the media archive and extracted those materials that would startle every market participant today – with one goal – to remind that after the profits comes the loss.
January 17, 2007 – “Housing prices in Bulgaria will jump by over 70% over the next 5 years“
The country’s entry into the European Union logically leads to euphoria in the real estate market – the expectations are that the interest of foreign investors will increase and prices will continue to rise. A report by Industry Watch was cited, according to which the real estate market will continue to outpace the country’s income growth by levels of 12-15% per year. And something more – an example is given with Spain, where property prices jump by 800% since its entry into the EU, and a similar development, albeit on a smaller scale, is expected from the Bulgarian market.
December 3, 2007 – “A bleak future for the real estate market in Bulgaria“
In the year in which Bulgaria joined the European Union, the real estate market registered huge interest, especially from foreigners who believe that the geopolitical event will push prices even higher. The search for good profits from the until recently undervalued housing market is rapidly inflating housing prices across the country. However, the investor Dan Amos warned at the end of the year that the market in our country is overvalued and there are clear indications of a bubble. He puts forward purely economic arguments – rent-to-price ratio and price-to-income ratio, and doubts the high levels of profit, which he marks as unsustainable.
July 21, 2008 – “Peak moment in the real estate market“
In the middle of the year the market turns and the supply outstrips the demand – by up to 50%, which means that there is 1 buyer for each property. “The main factor influencing prices is the global real estate crisis,” said Katya Tsenova, then executive director of Address Real Estate. At that time the average prices for the country reached 914 euros, and in Sofia – 1094 euros per sq.m. “Inflation and rising interest rates are naturally a major factor in determining prices,” Tsenova said.
November 18, 2008 – “The apartments are already being sold at a 30% discount“
The large supply and the small demand logically lead to a serious drop in prices – from 30 to 50 percent, according to Shtelyan Kalchev, then manager of the Remax Connection agency and today’s co-founder of the Primo + agency. “There is no longer a deal without a discount,” other brokers said, predicting an even bigger drop in prices next year.
December 1, 2008 – “Is the Bulgarian real estate market collapsing?“
At the end of 2008, it became very clear that a new, unforeseen phenomenon affected the Bulgarian real estate market – the global financial crisis, which later turned into an economic one. Invited to comment, banker Levon Hampartzoumian predicts that there will be a correction in the real estate market and weak projects will fail. At the same time, banks stop being active and take a “waiting position”, which stops the inflow of financial resources, which in turn turns the market down. “Buying a home is not a question of any cost,” he said.
September 21, 2009 – “Small homes and properties for sale below market price“
“People are very wary of taking out long-term loans because they are unsure of their income,” said Teodora Dimitrova of ERA Real Estate. She adds that clients are targeting undervalued properties up to 50,000 euros and prefer to pay cash without credit.
November 11, 2010 – “Sofia leads in falling housing prices in Europe“
At the end of 2010, the scale of the crisis in the Bulgarian market became finally clear – according to ERA data in the Bulgarian capital, property prices fell by 22% per year, which ranks it among the top places in Europe. In Dublin and Lisbon alone, a larger decline was recorded – 24 and 26 percent, respectively. “Bulgaria is among the leaders in decline, because for many years it occupied the leading positions in terms of growth,” Teodora Dimitrova of the agency commented at the time.
January 25, 2011 – “Property prices in Sofia at the end of 2010 – as at the end of 2007”
One of the largest banks at the time, Raiffeisenbank Bulgaria, registered a decline in its housing price index to 2007 levels – before the big peak. This means that the market has lost as much as it gained at the rapid rate of growth and has returned to its previous levels.
All the similarities with today’s events are not coincidental
As you can probably see, a number of parallels can be made with the current situation on the real estate market in our country. Since we decided to tell the story in this text without comparing it with the present, we will leave it to you to judge what the market situation has in common 10-14 years ago and today.
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