Sofia ended up in ninth place in the world in terms of housing price growth
In the third quarter, Varna overtook Bulgaria’s second largest city, Plovdiv, in terms of the number of concluded real estate transactions. In the maritime capital between July and September of this year The Registry Agency has registered 3,657 real estate transactions, while in Plovdiv there are 3,582.
The other shift in the ranking of the six largest markets in the country occurred as a result of the insertion of Nessebar between them. There, the local registry office, which includes not only Nessebar, but also Sunny Beach, Ravda, Vlas and Aheloy, has admitted 2,382 real estate transactions between July and September, while in the regional city of Burgas there are only 1,931 in number. That actually
it’s not the first time it’s happened
– the trade in holiday and other properties in Nessebar has been very active for a long time.
In general, however, the number of real estate transactions concluded in the third quarter in Bulgaria decreased by 13% on an annual basis, and this process did not pass either the capital, Varna, Plovdiv, Burgas or even Nessebar. Where there were big increases in 2021 and 2022, now they are also marking the biggest decline.
The trend is similar in our sea and mountain resorts. In Blagoevgrad, transactions decreased by 23.8%, in Veliko Tarnovo the decrease was by 16.5 percent, and in Pleven – by 11%. The performance of Kardzhali is slightly better, where transactions have fallen by only 8.5%.
The significant slowdown in transactions in seaside resorts continued in the third quarter. In Balchik, they decreased by 22.7%, in Pomorie – by 21.1 percent, and Tsarevo – by as much as 30.8%. A slight decrease – by 11.3%, was recorded in Kavarna.
In the mountain resorts, the best performance is Razlog, where the deals in Bansko are also recognized. There, the decrease is only 4.3%. In other mountain resorts
double-digit declines in deals continue
In Samokov, where the transactions in Borovets are recorded, they decreased by 19%, in Smolyan, where those in Pamporovo were also reported, the decrease was by 13%, and in Chepelare it reached 14.3 percent compared to a year earlier.
While the number of transactions is down across the board, the property market shows no signs of a bubble bursting. For example, where the housing market is liveliest – Sofia, Plovdiv, Varna, Burgas and Nessebar, the number of transactions is now around and slightly above the levels of 2019, which was a record for the property market. It was greatly stimulated by the strengthening of demand that occurred in 2021 and especially in 2022, so now the declines speak rather of appeasement.
With prices, however, the picture is a little different – they continue to grow, and Sofia, which is the largest and most developed housing market in Bulgaria, even took ninth place among 107 cities in the world in terms of property price growth, according to the Global Residential index Knight Frank’s Cities for the second quarter.
With price growth of 8.8% on an annual basis
Sofia overtakes the Icelandic capital Reykjavik
and is just behind Budapest in the index of the consulting company. The first eight cities in this ranking are in the hot zone, where price growth is even double-digit: Ankara, Istanbul, Dubai, Vilnius, Zagreb, Jerusalem and Athens. In Ankara, for example, prices have risen by 105 percent compared to a year earlier.
But while Turkey is heavily impacted by hyperinflation and the devaluation of its national currency, half of the other markets included in this ranking have seen year-on-year price declines. Thus, the global index of price growth is only 1.7%, and it was 3.2% a quarter earlier.
According to Knight Frank’s analysis, interest rate hikes are likely behind us, although they remain high compared to recent historic lows. But if this has a calming effect on prices and they do not rise as they did in 2021 and 2022, then there are opposite trends that
push the property market in another direction
There is, for example, a limited supply of new housing, and demand is unlikely to decrease significantly. The lack of new construction activity in recent years combined with lower market liquidity has created shortages almost everywhere in the world, which is pro-inflationary.
There are also purely demographic problems, caused largely by internal migration in many countries. It is purely economic, it is related to finding a new job, but it also means an increased demand for housing, which naturally raises their prices or at least prevents them from falling further.
In addition, some real estate markets, mainly in the USA, recorded a sharp drop in prices last year, and naturally in 2023 their corrections will not be so sharp downwards.