The rising demand for residential property in Sofia has gradually led to an increased supply by the building contractors, with the strongest effect of the increased supply of new construction being felt in the past third quarter. This naturally led to balancing of the market in Sofia at an equilibrium price of about €1,000/sqm and a slowdown in the price increase, as were our expectations about the market this year.
Bulgarian Pproperties’ data show that in the third quarter the average property prices maintained the levels reached in the previous quarter and remained unchanged.
Average prices
Bulgarian Properties’ data show that for the third quarter of 2017 the average property price in Sofia remained at the level of €1,060/sqm, just as in the second quarter of the year. The annual price increase compared to the 3rd quarter of 2016 is 14 percent. The average purchase price of the dwellings in Sofia is €93,000.
The pace of the price rise in Sofia accelerated in the spring of 2016, and for one year the increases were between 15 and 18 percent. The latest data shows that the price growth has slowed down.
Sales volumes
Recently reported data from the Registry Agency for the 3rd quarter shows that 6,300 property sales were registered in Sofia compared to 6,073 for the same period of the previous year, which is a growth of 3.75 percent on an annual basis. For the first 9 months of 2017, the volume of real estate sales in Sofia rose with 4 percent, with the sales of property under construction being left out of the statistics since it will be recorded at a later stage.
New construction and parameters of the purchased properties
Purchases of properties in new developments continue to account for 60 percent of the sales in Sofia, according to Bulgarian Properties. In the last few months the supply has increased and has already managed to meet the increased demand. This has led to a slowing of the price growth rate and balancing of the housing market in Sofia.
Half of the purchased apartments are 1-bedroom apartments, 35 percent are 2-bedroom ones, the 3-bedroom flats are about 5 percent, as well as the studios. The average area of the purchased dwellings is 84 sqm – about 6 sqm less than in the first months of the year.
The 1-bedroom apartments are the most sought-after, and are the first ones to be sold out in the new buildings. This is due to their more affordable final purchase price and to the fact that they are more liquid for sales and lettings. There is also a tendency for an increase in the purchases of the 2-bedroom dwellings, which are mainly purchased by families and for own use.
The apartments on the 2nd to 6th floor are the most purchased ones. There is still a relatively high share of homes located on the low floors – the purchased flats on the ground floor and the first floor account for about 17 percent of all purchased apartments, due to the greater availability of such properties in the new buildings on one hand, and that often this type of housing in the new construction goes with its own yard and this makes them attractive to families with children, especially when they are set in gated complexes. The apartments situated on the high floors – from the 7th to the 10th, are only about 10 percent of all purchased.
The average stay of the properties on the market is 3 months and the discounts made from the bid price are below 1 percent – on average 0.7 percent.
Preferred neighborhoods and property prices
Observations from Bulgarian Properties indicate that the most purchased apartments in the 3rd quarter are located in the districts Krastova Vada, Manastirski Livadi, Mladost 4, Studentski Grad and Vitosha. We add to them the extremely well-presented sales of new-build dwellings in our exclusive Sofia North Park complex in Vrabnitsa-2.
The most expensive are the dwellings located in the city centre and in Lozenets, where the average prices for the past quarter were €1,790/sqm in the centre and €1,430/sqm in Lozenets.
Strelbishte and Gotse Delchev are other preferred neighborhoods with prices between 1,100 and €1,300/sqm and with extremely limited supply of both new and old construction.
We are proud with successfully completing the sales of the totally sold out South Park West complex in Gotse Delchev district, which is located within metres from the entrance of the South Park and which provoked a lot of interest among the buyers even with sales “on green”. The complex is now almost complete.
Perspectives
The market equilibrium is a short-term phenomenon and our expectations are that the upward trend will resume from the end of this and the beginning of the new year.
Many are the favorable factors that continue to affect the demand and provide prerequisites for further growth. Bank lending is the main one. Banks’ new offers are with even lower interest rates and attractive terms, the volume of the approved loans continues to grow and it seems that credit expansion will continue. In addition, the average wages in Sofia are rising, the unemployment rate is declining, the economic growth is accelerating and, in general, all macroeconomic factors point to an upward trend in the property market.
Currently we have stable demand, available supply, well-prepared buyers and available bank financing. These are optimal conditions for the development of the housing market in Sofia. The only thing that is still missing, but is demanded and which is expected to appear in the coming months, is housing in finished buildings. The presence of such a product on the market will activate those buyers who are still waiting in search of something completed.
