Bulgarian real estate is one of the most inexpensive among the countries of the European Union. This is due to the normal standard of living, low prices for consumer goods, and maritime climate. Residential property is attractive to foreigners and citizens of the state as a long-term investment, as well as a way to obtain a rental income, which, although relatively low, can cover the cost of maintenance and bring some profit.
Growth of property prices in Bulgaria in 2023
However, over the last year, there has been a rise in property prices in Bulgaria. What is the reason? What strategy to choose regarding the sale of the dwelling at the seaside? Further, we understand in the article.
Rising world prices and Bulgaria's integration into the Eurozone
To begin with, the price increase in Bulgaria is not a unique situation. The situation in other countries is similar. Prices around the world are rising because of strong demand and recovering economies, and because major regulators have been pouring huge flows of currency into the stock market since the pandemic began. What has this led to? In 12 2021 months, commodities rose in price: corn +102%, sugar +59%, cotton +42%, grain +27%, Brent oil +96%, natural gas +64%, copper +93%, coal +87%, aluminum +58%, steel +54% - one of the key materials for builders.
Bulgaria ranks eighth in the European Union for first-quarter housing price growth in both annual and quarterly terms, according to data from the European statistical office Eurostat.
Between January and March, home prices in Bulgaria rose 7.5 percent, higher than the EU average of 6.1 percent for the period.
The leader in annual EU house price growth is Luxembourg with 17%, followed by Denmark with 15.3%, Lithuania with 12%, the Czech Republic with 11.9%, and the Netherlands with 11.3%. Germany and Austria also reported higher annual house price growth than Bulgaria, at 9.4% and 8.3%, respectively.
Compared to the fourth quarter of 2020, housing prices in Bulgaria rose by 3.2% in 2021, almost twice as fast as the EU average.
The leader in this indicator is Estonia with a quarterly house price increase of 6.6%, followed by Denmark with 5.8% and Lithuania with 5%. Bulgaria is followed by the Czech Republic with 4.6%, Hungary with 4.5%, Luxembourg with 4.3% and the Netherlands with 4%.
Key factors in the growth of resort real estate prices in Bulgaria:
Global processes of inflation and rising prices for everything - real estate, cars, raw materials, building materials;
Integration into Eurozone, from January 1, 2024, in Bulgaria will be introduced single currency - Euro;
Increasing the attractiveness of Bulgarian real estate for Europeans as the price level for example in Germany, Spain, Croatia, the Czech Republic, Slovakia and Poland is even higher and prices continue to rise;
Bulgaria has a more democratic regime of restrictions due to the Covid-19 pandemic, which also attracts residents of European countries where governments practice strict lockdown policies. As a consequence, EU citizens not only buy real estate here but also consider moving if they have a remote job, a small business or sufficient financial resources to change jobs and live in more comfortable conditions.
Bulgaria is becoming an attractive destination not only for retirees but also for young families with children, as well as older families with capital and a desire to live by the sea.
One of the factors which are actually not only for Bulgaria but also for the whole world is the availability of mortgage credits.
There are billions of leva in the banks in Bulgaria, and some of this money goes to the market. Last year people realized that they did not want to live in cramped conditions, and it would be good to buy real estate outside the big cities.
What are real estate market participants talking about?
Most of the population is convinced that there will be an increase in prices and a decrease in income. This trend will have a negative impact on overall purchasing power. However, our clients from European countries, which were the last to join the Eurozone, claim that this will only lead to the growth of the economy and that not only expenditures but also incomes will grow, as in Slovakia, for example.
Some market participants are confident in the further growth of housing prices (to the level of the EU countries), and want to make money from the difference between current prices and the resale price of housing in 2-5 years.
Opinion of experts and forecasts
In fact, the prices of residential and commercial real estate in Bulgaria are growing steadily and evenly. Construction in the country has visibly increased and is active, but still, there is a shortage of supply. The demand exceeds the supply - new buildings and the secondary market are not able to satisfy the demands of all buyers.
At the beginning of the spring of 2021 Bulgarian citizens and foreigners began to actively buy real estate. It is logical to expect that with the introduction of the Euro, the cost of apartments will greatly increase, so the demand has also increased - people want to buy before the prices go up again, and before the country's integration into the Eurozone.
It is predicted that after the introduction of the single currency, pending the stabilization of the situation, there will be some decline in buying activity. In this case, the supply may exceed the demand, and then prices will remain at the same level.
Yes, cyclicality is always present in the economy and the real estate market in general. But at the moment, our practice and communication with real estate market players show a more likely development of another scenario - high inflationary expectations have changed consumer behavior. In the hope of high profits from the subsequent resale of housing (after 2-5 years), ordinary people and investors are sometimes buying several apartments in different areas. Demand this season has risen sharply, as well as the cost of building materials. As a consequence, property owners and construction companies raise prices. However, it is worth noting that not all sellers perceive the situation objectively, and raise unreasonably prices for low-quality housing, with more distance from the beach, in old complexes. Remember that the sale announcement and the actual transaction - a big difference. Sold at a normal price and terms primarily those apartments whose quality, location, and price meet the average market parameters and do not go beyond an adequate comparison of competitive offers.
Which seaside property purchase strategy should I choose?
While experienced investors use a variety of tools, ordinary citizens are better off investing in real things: real estate, home improvement, cars, and education. And the best time to buy is right now. Don't put off solving serious issues for the future, which has become too unpredictable.
For sellers, our advice is simple:
study objectively the price level in your area, both on listing sites and through real estate agents; ask agents the right questions about actual transactions ("A map is not a terrain") so as not to unreasonably inflate prices;
do not accumulate debts to management companies for services, even if you can not come - it is not their fault, but the quality of service of the complex when there is a lack of funding, and the very possibility to sell the property falls, so it is only worse for the seller
Take into consideration the currency exchange rates at the time of purchase and planned sale, and then your listing will probably become realistic, and will not add more fuel to the pot of inflation. Make reasonable decisions, and then the interests of buyers and sellers will coincide, satisfying the interests of each party.
Thank you for reading this article!
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