The Bulgarian property market has gone through a phase a “maturation” during 2006. After a dynamic and active first quarter during the summer period, the market has slowed down significantly. The last 3-4 month of 2006, after the final “go ahead” of the EU commission about Bulgaria’s EU accession, has seen a real explosion of the number of properties sold in Bulgaria.
The news itself has led to a speculative reduction of the supply, playing on the expectations of bombastic prices during next 6 months. Bulgarians seem to have believed this is the last chance to get on to the property ladder which resulted in a property shop-spree frenzy. The number of completed property purchases is about 285,000, which is over 20% higher compared to 2005. The actual volume of investments in Bulgaria properties in 2006 though, is about €10 billion which is twice the investments during 2005.
Foreign investors and buyers have invested about 1 billion euro in Bulgarian properties this year or 10% of the total real estate investments, which compared to the 3-4% during 2005 is also a serious growth.
Apart from Varna and Burgas on the Black sea coast, highest capital growth has been registered in Stara Zagora, Yambol and Veliko Tarnovo, which confirms the trend from 2005 for a significant growth of the small regional centres as opposed to the more “mature” markets of the largest cities in Bulgaria.
The nationwide capital growth in Bulgaria for 2006 was 19% which is still more than impressive and expectations for 2007 are for growth about 15%. Prices in smaller towns will continue to catch up with larger cities. Rental incomes are also believed to be quickly increasing to about 15-20% of the current levels, bringing the Bulgarian property market a step closer to the matured buy to let European property markets. Prices of land is expected to be the new boom giving opportunities for lucrative speculative market opportunities.