Our country is in second place in terms of housing price growth in the EU. This is shown by Eurostat data for the last quarter of last year. The price increase is nearly 7% in the first quarter of 2024
“History does not remember such a quarter as the one that ended. It was an absolute record, usually January-February are weaker months for this business. But this year something happened and not only is this quarter a record in the entire existence of the market, but it reversed the trend. We had 5 consecutive quarters of decline in the number of transactions and a decline in the number of mortgage loans,” said credit consultant Tihomir Toshev.
He explained that there was a 15% growth in the number of transactions and a 24% growth in the number of mortgages.
“It is this active market that drives prices up. We have a high demand and a low supply of properties. Whenever something is demanded more than it can be offered, its price goes up. Despite the many issued building permits and the appearance of new construction, ready-made apartments are almost not available, and the demand is high”, added Toshev for Bulgaria ON AIR.
According to him, there are people who believe that property prices will collapse and will buy a property that will cost 500 euros per square meter in Sofia.
“They mature after 7-8 years, they usually buy twice as much as when they had the opportunity. The main group is people who have well assessed their opportunities and enter the market. Last year we had a serious growth in deposits, they are over 80 billion .Those people who have money saved are active participants in the real estate market.In recent years incomes have also increased due to inflation.This makes more people feel at ease and make a decision to buy a property even at these prices,” explained the credit consultant.
Toshev emphasized that more and more people will resort to mortgage loans.
“If you look at an ordinary two-room apartment, in the central areas of Sofia it is between 200 and 300 thousand euros. Something that was unthinkable a few years ago. And right now we definitely have one of the lowest interest rates in the world. This is one of the incentives of the market. But people cannot expect that it will always be like this. At the moment, 96% of the loans are taken out with a floating interest rate of 25 to 30 years,” he added.
Of course, the interest rate can go up as well as down.
“People have to be very careful in their judgement, especially when now a young family is going into debt of 300-400 thousand euros to get a property in a big city. At the moment the movement of interest rates is going down. So because of that we have the expectation here , that when we enter the Eurozone, we will not see an increase in interest rates, but they will remain low. In most countries that have entered the Eurozone, there has been a higher growth in property prices, but the moment in which we will enter is also important “, also commented Tihomir Toshev.
The average increase in these countries was between 5 and 10%.
“Most people at the moment prefer to buy a ready-made home, but the supply is too small. That’s why we’ve had a very strong increase in greenfield purchases over the last year. People who go out and buy under construction need to know that they’re going to get that a house of putty and putty. And then they will have to invest a considerable amount to finish it. The most risky group are people between the ages of 23 and 28 who are at the beginning of their careers, have no money saved, rely on help from their parents “, explained the credit consultant.
He himself believes that the real estate market is currently extremely stable and there is no “bubble”.
“The Bulgarian mentality does not change – we prefer to live in our own home, it gives us security and peace of mind. It is considered a mandatory thing that we must achieve in life,” concluded Toshev.
See all current news from Standartnews.com
