Bulgarian market growth seen
Long term investors in the Bulgarian property market have seen a substantial increase in the value of their investment despite price falls of over 30% in the last three years.
Research from Sofia based real estate agency Bulgarian Properties shows that prices of residential property have surged by more than 200% on average over the past 10 years.
‘We witnessed a very dynamic decade for the Bulgarian property sector, which brought about a drastic surge in prices and in number of deals, as well as more dynamism to the building sector, followed by a steep contraction in the last two years,’ said Polina Stoikova, chief operating officer at the agency.
Using figures from the National Statistical Institute (NSI) and Registry Agency data, the report shows that between 2000 and the third quarter of 2008, prices in Bulgarian regional centres had been rising rapidly before staging a sustained decline, producing an average growth of 201% in the decade.
The largest increase, of 330% was in the city of Silistra, followed by Turgovishte and Kurdjali with 310% and 309%, respectively. The significant surge was attributed to the fact that property prices in these cities were below average levels nationwide in 2000, at about 150 lev a square meter, compensating the low cost with a faster growth in prices in subsequent years to catch up with the average rates in the country.
Property prices in the capital, Sofia, increased by 171% from 2000 to 2010, while the property market in Varna saw growth of 237%.
Taking inflation into account, the accumulated real growth in housing prices in regional was 68% on average in the country, with prices in Sofia and Varna increasing by 51% and 88%, respectively.
Between the third quarter of 2008, when housing prices reached their peak, and the last quarter of 2010, the market saw an average decline of 33%, with the average price for Sofia homes dropping by 36.6%.
The accumulated real decline after adjustment for inflation between the third quarter of 2008 and the last quarter of 2010 was 36.6%, while the average annual rise of apartment prices in the country in the past 10 years was 11%.
Sales of residential property in 2010 were 45% lower than in 2007, according to Registry Agency figures. In 2008, sales declined by 5% year on year, compared with an annual drop of 37% in 2009 and 7% in 2010.
On one hand, the market witnessed a 45% contraction in sales volumes against their peak levels in 2007 and an accumulated decrease in apartment prices of 36.6% on the other. According to Stoikova, the data proves that deal volumes, not prices, are the first to respond to market developments. In 2011, the number of sales is expected to rebound, which will be a sign that the market has headed for recovery, she said.
The number of construction permits fell by 56% in 2010 compared with 2007, NSI figures showed.
The number of residential units in the country rose by 2.26% between 2004 and 2009, with cities registering an average rise of 3.94% against a decline of 0.56% in villages.
In Sofia, the number of housing units rose by 2.59% but the largest increase was in Bourgas, up 24.49% due to a building boom along the Black Sea coast.