Demand will remain high, and price increases will be slightly above the expected levels of 5-10%, according to an analysis by Bulgarian Properties
2024 began with a dynamic housing market, and this activity continued throughout the first quarter, making it one of the strongest quarters in housing market history. This was also confirmed by the data of the Registration Agency, which showed an increase in the volume of sales in the leading urban markets.
“This year the market shifted into a higher gear. This was largely expected in view of the still low interest rates on loans, growing incomes, the slowdown in inflation and the pace of property price growth on the one hand, and our expected acceptance into the Eurozone on the other,” commented Polina Stoikova, Executive Director of BULGARIAN PROPERTIES.
“At the same time, this new speed contributed to an acceleration of price growth after a slowdown at the end of 2023. This is most clearly seen in the leading urban market Sofia, where growth at the end of 2023 was around 3% year-on-year, and 2024 starts with a growth of nearly 7%,” she adds.
There are still no indications of a slowdown in bank lending and interest rate hikes. This stimulates both those looking for their own home and those who want to acquire a second home or vacation home.
BNB data show that the average interest rate on newly granted housing loans in BGN was 2.54% in February, which is comparable to the levels from the beginning of 2023, and for euro loans there is even a drop in the interest rate and it is already below 3%. As a result, the volumes of newly granted loans continue to grow. The registered growth in the first two months of this year is nearly 41% on an annual basis.
Average prices and price growth in Sofia
The average price of homes purchased in the 1st quarter of 2024 in Sofia according to BULGARIAN PROPERTIES data is 1,650 euros/sq.m. at 1545 euros/sq.m. at the beginning of 2023. Thus, the annual price growth in the capital accelerates nominally to 6.8% after a slowdown at the end of 2023. The average total price of purchased apartments remains at around 137,000 euros.
Sales volumes
The calculations of BULGARIAN PROPERTIES based on the data of the Registration Agency show that property transactions in Sofia marked the first growth after several consecutive quarters of decline since 2022.
7,298 real estate transactions were recorded compared to 6,381 in 2023. Thus, the recorded growth is 14.4% on an annual basis, which is one of the largest increases in transactions in Sofia, and in terms of volume, ranks the quarter among the strongest first quarters for the real estate market.
The data of BULGARIAN PROPERTIES also show a growth in transactions in Sofia, and this growth is about 20%, including transactions with housing in newly constructed buildings.
Accessibility of housing in Sofia
The affordability ratio value of BULGARIAN PROPERTIES at the end of 2023 fell to 1.03. This suggests that housing affordability in the capital has improved as incomes rise faster than prices.
The average salary in Sofia reached BGN 3,025 in the last quarter of 2023, so for the purchase of 1 sq.m. residential area in Sofia required about 1 average monthly Sofia salaries. For comparison, in 2008 (at the previous peak of the market) 3.4 salaries were needed for the same area.
Preferred neighborhoods and property prices in them
BULGARIAN PROPERTIES data shows that the average prices in the most popular neighborhoods based on actual transactions are:
• Banishora – 1,615 euros/sq.m.
• Malinova Dolina – 1,400 euros/sq.m.
• Krastova vada – 1,935 euros/sq.m.
• Sheep trough – 1,440 euros/sq.m.
There is activity and purchases of housing throughout Sofia, and this year the trend of insufficient supply on the secondary market continues, even though the conditions for the sale of property are excellent.
At the same time, new construction is developing and trying to bring the necessary amount of housing to the market to meet the demand, and buyer preferences are definitely towards new construction. That is why projects continue to be sold at an early stage of construction and many of the buildings are completely sold out by the time Act 14 is reached.
Parameters of purchased housing
Two-room and three-room apartments are the most sought after and dominate the market. The share of purchased two-room apartments is 57%, and three-room apartments – 40%, which almost does not remain a share of other larger or smaller apartments. This shows that the demand for large housing that emerged after the pandemic has subsided. At the same time, three-room apartments hold a significant share of demand, which shows that there are active people in the market who buy for their own use.
Conclusions and perspectives
We are witnessing a strong start to another successful year for the real estate market. These are our expectations based on the first data that are released to the market.
Factors affecting the housing market still have a favorable impact. Positive economic growth, low unemployment, income growth, low interest rates on mortgage loans – all this provides excellent conditions for real estate investments.
The slowdown in inflation has also weakened its effect on the market, but it has been replaced by fears and anxieties about our acceptance into the Eurozone and how that will affect property prices and people’s savings.
All this leads us to think that demand will remain strong and as a result price increases will be slightly above the expected levels of 5-10%. In general, however, the real estate market remains well balanced and provides opportunities for concluding good deals in 2024 as well.
