The market is showing a slight cooling

This was stated by Hristo Spasov, director of the Mladost office, on NOVA NEWS. A decline was registered in the number of concluded transactions in Sofia for the last quarter of 2022. But this in no way means that property prices will start to fall sharply. The decline in the number of concluded transactions is due to the fact that, as of today, people’s purchasing power is decreasing. They are saving on major expenses and are more demanding when choosing a home. 

Why real estate prices reached such figures

The rise in prices is mainly due to the fact that construction costs have increased by approximately 27%. And we all know that when something costs more to produce, it also costs more when it is sold. Despite the price increase, however, Bulgaria is still among the leaders in the ranking of affordability for buying a home of your own. The affordability coefficient is easily calculated by taking into account the average wage in Bulgaria and the price per sq. metre when purchasing real estate. In Bulgaria today, the affordability coefficient is approximately 0.8, which means that we are most likely to expect a decline in housing prices when this coefficient falls to and below 0.5.

Buyers’ and sellers’ views of the property market are becoming increasingly divided

“While the seller of a property thinks that inflation will make his property more and more expensive, the buyer hopes that the “property bubble” will burst any moment, which also leads to an additional decline in real estate purchase transactions.” Mr. Spasov added. 

Is there a halt in project construction and a decline in investments

Investment in construction continues. More and more in the construction sector there are the so-called “group investments” aimed at obtaining a more favourable price and terms. Hristo Spasov advises: “It is extremely important for people to choose an investor who has proven himself over time and has completed projects. Such companies prepare a risk assessment in advance, even before starting a given project, evaluate it, carry out a market analysis and only then announce their prices. In this way, the chance of price addendums when buying off-plan is reduced to a minimum.” 

Watch the full interview in the video here.