Is Bulgarian property recoverying? Pre-crisis prices Vs current values.
26 September 14
It is clear to all that we are not yet back to the prices of 2007-2008 before Leman Brothers collapsed, credit default swaps became a household term and subprime mortgages were traded as gold dust, however it is equally clear that there is movement in the Bulgarian market and transactions are happening. So how far have we got to go?
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Sofia as the capital with the highest population, greatest demand and largest diversity of buyers would always survive the storm better than others: in August this year Sofia property prices were on average 41.7% lower than they were before the Federal Reserve pulled the plug back in 2008 and the credit crunch began. The average price is currently 753 Euros / sqm with a very margin growth seen consistently in 2014 so far.
The worst hit areas have been the ski resorts where demand was almost exclusively cohorts of likeminded Irish and British buyers, who were financially impacted similarly and simultaneously causing a tsunami of vendors, eradication of demand and prices to plummet. |
Bansko values are currently 72.7% below the pre-crisis levels, although many who were sold at grossly excessive prices at 1500+ Euros / sqm, are facing 85% losses. Prices are 5.6% lower than this time last year, average achievable price across the Bansko region is now 246 Euros /sqm.
Varna region finds itself in the peculiar position of statistically suffering the least with properties being just down by 35%, however this is largely because owners there are typically not encouraged by mortgage repayments, low rental returns, growing families, inward migration, expansion in local employment, young professionals feeding the property ladder etc. Instead, most stand firm residing and personally using family owned homes passed down through the generations, thus they refuse to sell for less and actively decide to stay an owner rather than become a vendor. As a result the Varna region see very few transactions at all, most likely those who do actual sell are experiencing losses closer to 50%.
Sunny beach prices are 48.5% down from 6 years ago at an average of 466 Euros /sqm, this is a 4.6% drop year on year from August 2013, largely explained by war in the Ukraine and the devaluation of the Russian Rubel. Comparatively, this is by far the most active area of the whole Bulgarian market with approximately 4,500 private property sales in the region so far in 2014, although transactions are down by 25-30% overall by comparison to 2013.
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