The real estate market in Bulgaria is entering a new stage after the strong increase in prices in recent years. The profitability of housing over the past 5-10 years has indeed been impressive, but a significant part of this growth is the result of catching up with price levels in other countries in Central and Eastern Europe. Therefore, a repetition of the same dynamics in the next decade cannot be expected, comment real estate and investment experts.
One of the characteristic features of the market in our country remains the strong tendency of households to direct their savings to housing. Property is traditionally perceived as a safe and understandable asset - it is tangible, can bring rental income and be left as an inheritance. Historical experience with high inflation, banking crises and economic instability further strengthens the preference for real estate investment.
After a prolonged period of appreciation, however, the question becomes increasingly important not only whether prices will continue to rise, but what the real return on home ownership is. Here we must take into account rental income, local taxes, transaction costs, repairs, maintenance, periods without tenants and the cost of mortgage financing.
The ratio between potential return and risk is also changing. A buyer who enters the market after a significant increase in prices starts his investment from a much higher base. This means that the strong performance of the housing market in previous years is not in itself a guarantee of a similar capital gain in the future.
Liquidity is also important. The home cannot be sold immediately at market price, and outside the most active markets, finding a buyer can take a significant amount of time. This distinguishes real estate from liquid financial assets and is important when quick access to capital is needed. Here, the most common solution is to lower the price below the market price.
Yet real estate is a strong investment tool. For example, a home acquired at a reasonable price and in a good location, with sustainable demand and adequate rental income, can remain an attractive long-term asset. The change is more in expectations – After years of rapid price increases, it is increasingly difficult for investors to rely solely on future price increases.
Detailed statistics on average property prices in Bulgaria by city and neighborhood can be found at imot.bg