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Bulgarian Property and Real Estate Market 2009

It's not really going to do any harm to do a little crystal ball gazing about the Bulgarian property market for 2009, after all the world's financial and property experts have got it totally wrong for more than a year now, so we can't do any worse. A brief scan of the Bulgarian property market during 2008 shows that the market has slowed but is still growing.

Q1 brought large price increases of more than 20%, but eventually, as the global financial crisis impact started to be felt, Q3 brought rises of only 3%. Large off-plan developments suffered as buyers started to prefer ready-built and finished projects. Prices in many of these huge developments started to fall with buyers concerned that such developments might never be completed.

Nonetheless, this was a significantly better showing than the UK's poor performance of minus 15% on property prices from Nov 2008 to Nov 2009, according to Halifax figures. The UK is not alone in western europe. The national association of real estate agents in France is predicting that the average house price in the country will fall by as much as 15% by the end of 2009. Furthermore, in the UK, economists are predicting a shrinking economy, with a contraction of 0.2%. Sterling has been sliding dramatically!

But what about Bulgaria?

By comparison, whilst the country is not predicting massive growth in GDP, Bulgaria is likely to show at least an increase.

The currency is also pegged to the euro, with businesses calling for entry to the eurozone sooner rather than later to enhance the business climate. In mid-December the International Monetary Fund  forecast that Bulgaria's economy will grow by 2% in 2009. IMF's data for the first nine months of 2008 showed that Bulgaria's economy continued "developing well" despite signs of growth slowing down. The IMF also anticipates the current account deficit will reduce from 24 % of gross domestic product in 2008 to 15 % in 2009, and inflation will fall to 4.5 per cent as food prices worldwide decrease.

Tourism, a very good indicator of house prices, shows current growth at 22% with predicted growth being maintained in double digits for some years by experts in the industry. The Daily Telegraph recently reported that they believe Bulgarian winter resorts will be ever more in demand because of the value for money which Bulgaria can offer the property buyer. A Place in the Sun went on to cite Bulgaria as one of their recommended countries for 'Where to Buy 2009', "offering Brits a safe haven from the falling pound and plenty of property to be bought for their money".

Barclays Capital is projecting some recovery for the pound in 2009, making Bulgarian properties good value compared with 2008. As a note, conversely, if you are selling your Bulgarian property it might be a good idea to secure forward rates now with a good specialist currency broker whilst they are at their most advantageous for you if you are repatriating the money you make from the sale back to the UK.

There is also the emerging middle class to take into consideration when thinking about property in Bulgaria. Bulgarians themselves are becoming more affluent and looking to property purchases. They have the highest home ownership, without mortgages, amongst the EU countries and see home ownership as a long term asset. The younger affluent Bulgarians are buying more than has ever been seen before.

A Buyers Market?

Certainly it has become more a buyers market. Cash rich foreign individuals and vulture funds are seeking out properties for pure investment and capital growth. They are always aware of markets which are bottoming out and are looking to buy in order to take advantage of "when the good times" roll again and prices go up swiftly. They are recognising that there are signals out there that the market globally is reaching its lowest point, so they will be buying to make sure they don't miss out and will be the first to benefit from the inevitable upwards spiral in property prices.

Added to this, there are plenty who don't have to sell their Bulgarian property. It is likely that these property owners will hold and wait it out;  this could bring an undersupply of houses on the market which has the potential to drive prices up in the country.

The banks and financial institutions...  At some time the banks will realise that they have to free up lending. Without this their own businesses will remain stagnant and could even fail, so freer lending will happen, guaranteed! And when it does, be prepared for a surge in property buying in Bulgaria.

Even during this "credit crunch", the basics for buying property are always the same. Compared to other European popular holiday and property destinations Bulgaria offers outstanding value for money and amazing cheap cost of living.

Bulgarian properties prices for new off plan apartments range between €40,000 to €80,000. Resale houses inland sell for €20,000 upwards depending upon location and condition. The main attraction in investing in Bulgarian property is still the medium to long term capital growth and cheap entry prices.

New stats released in the middle of December, show Bulgarian property in sixth place in global property searches (from Google data) with over 7% of the total market.