LM Legal Services Blog

According to analysts the prices of apartments in Bulgaria will not decrease further. The experts refer to the prices of actual purchases, underlining that the advertised prices sometimes are unrealistically high. There is already are a mismatch of the demand and the properties on offer. The most desirable properties have sold and there is a lack of good quality homes. At the same time developers can not launch new projects because there is no financing. The off-plan sales have completely stopped. Some experts recommend that the properties prices in Bulgaria should not be calculated per meter, as this can some times lead to confusion.

Almost 28% is the decrease in the number of deals on the property market in Bulgaria annually. This number is different in the different parts of the country but only Sofia and Varna have similar statistics. 72% of those who would like to buy a property in Sofia and Varna are prepared to pay not more than 40 000 Euros. In Plovdiv and Bourgas the buyers are prepared to pay not more than 25 000 Euros.

In 2009, 42% of the buyers paid in cash and 37% of the sellers had financial difficulties, not necessary inability to pay their mortgages or bad credits. In 2009 most of the buyers bought newly built properties and only 12 % of them have bought prefabricated apartments. The most active buyers were between 26 and 35 years of age.

The construction and the notarial chamber have offered to the Bulgarian government to freeze the interest rates for mortgages in case that this is the only home of the mortgagee.  It was proposed that the properties of the debtors should not be repossessed.  This will stabilise the property market according to the chamber.  Some analysts predict that the turnover in construction will decrease by 2 billion levs because of the recession. At the same time the debts between constuction companies will increase which will create a lot of tention.

Mortgage interest rates offered by Bulgarian banks have reached their peak in November. According to the specialists the increase of the interest rates have stopped rather then the lending of new mortgages itself. Most of the banks have tightened their conditions last month and the largest mortgages now cover not more than 75% of the price of new properties in the big Bulgarian cities, while in smaller towns they do not exceed 65% of the price. Concerning apartments in prefabricated blocks from the days of socialism, mortgages do not go over 60% of the price.  At the same time, the number and the size of the new mortgages have decreased in November.

Despite the steady growth of the Bulgarian economy, the international financial crisis is unlikely to miss Bulgaria. The Bulgarian economy is not dependent on the US economy, however 2/3 of the Bulgarian trade relations are with the EU countries, where the signs of recession are rather obvious.  According to the experts the recession will affect Bulgaria in 1 -1.5 years.  It might start in the winter when household expenses are higher, as well as the inflation.  The economic growth is likely to stop due to the slowing down of the property market and the interest increase.