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| Bulgaria’s house prices continue to rise, despite falling demand |
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After eight years of uninterrupted house price growth, Bulgaria’s house prices continue to increase strongly, despite falling demand. The nationwide house price index rose sharply by 10.69% during the year to Q2 2023, following y-o-y increases of 9.48% in Q1 2023, 13.37% in Q4 2022, 15.59% in Q3 2022, 14.6% in Q2 2022 and 11.53% in Q1 2022, according to the National Statistical Institute (NSI).
However, in real terms, house prices actually increased by just 1.8% y-o-y in Q2 2023, amidst high inflation.
Quarter-on-quarter, nationwide house prices rose by 4.25% in Q2 2023 (4.5% inflation-adjusted).
By property type:
Prices of new dwellings rose by 9.5% during the year to Q2 2023, up from the previous quarter’s 4.9% increase but lower than the prior year’s 12.3% growth. However, when adjusted for inflation, prices only increased slightly by 0.7%. During the latest quarter, prices of new dwellings were up 6.8% (7.1% inflation-adjusted).
Prices of existing dwellings rose strongly by 11.4% (2.5% inflation-adjusted) in Q2 2023 from a year earlier, its seventh consecutive quarter of y-o-y growth. Quarter-on-quarter, existing house prices increased by 2.7% (3% inflation-adjusted).
Bulgaria’s house price annual change
After rising strongly from 2021 to the third quarter of 2022, property demand started to slow by end-2022, amidst high inflation and gradually rising interest rates. Homebuyers have become more prudent in recent months, and often negotiate discounts from sellers. In the second quarter of 2023, the number and value of residential property transactions in Bulgaria fell by 15.5% and 6.2%, respectively, as compared to the same period last year, according to figures from the NSI.
Bulgarian Properties noted that transactions are rising again. “Although in the summer there was a certain decline in the volume of transactions and interest, this was logical in view of the summer season. Since the beginning of September, demand in the capital has strengthened and deals are being actively concluded,” said Bulgarian Properties.
European Union citizens can purchase properties in Bulgaria, including land. Before January 2012 foreigners could purchase land only in the name of a legal entity and were not allowed to own a property.
Residential construction activity continues to grow, albeit at a much slower pace. In the first three quarters of 2023, dwelling completions in Bulgaria increased slightly by 0.8% y-o-y to 14,710 units, according to NSI figures.
Bulgaria’s overall economy is expected to continue growing, albeit at a slower pace. In Q3 2023, the economy expanded by 1.7% from a year earlier, following y-o-y growth of 1.9% in Q2 and 2.2% in Q1, based on figures from the NSI. It marked the slowest pace of expansion since the economic contraction in 2020, mainly due to falling exports and a decline in public expenditure. On a quarterly basis, the economy expanded by a meager 0.4% in Q3 2023, at par with the previous quarter.
The European Commission expects the Bulgarian economy to cool, with projected real GDP growth rates of 2% this year and 1.8% in 2024, mainly due to a slowdown in household consumption and exports. This is a deceleration from expansions of 7.6% in 2021 and 3.8% in 2022.
Bulgaria’s housing cycle
In the past decade, almost zero interest rates on bank deposits have encouraged people to invest in real estate. That’s why the housing market started to rise in 2014 and has been accelerating ever since. From 2014 to 2022, nationwide house prices soared by 83.1% (34.1% inflation-adjusted).
This fully offset the massive crash in 2009-13 caused by the global financial crisis and the eurozone debt crisis.
During the global financial crisis, Bulgarian house prices plunged by a cumulative 35.2% (-41.5% inflation-adjusted).
But prior to the said global crisis, Bulgaria experienced a massive boom, with residential property prices surging around 300% from 2000 to 2008. |
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Source:
www.globalpropertyguide.com
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| Thursday, Dec 07, 2023 |
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| » RENTALS |
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| Office Space |
€ 600 |
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| Location: |
Veliko Tarnovo |
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