The Sofia residential housing market continued to be strong throughout the second half of 2007 and, according to the latest research findings from Colliers International, there were significant price increases in most locations.
However, in a different sector of the market, the supply of holiday properties around the country had slowed down, the report said. Although there was a 16 per cent increase in the number of holiday homes available in H2 2007, this needed to be reviewed in comparison with the annual increase from H2 2006 of 170 per cent in mountain resorts and 65 per cent in coastal resorts.
In Sofia the largest increases were in the Ivan Vasov neighbourhood, which saw average asking prices rise by 33 per cent in H2 2007. This was followed by Lozenets with a 29 per cent increase. Doctor’s Garden remained the most expensive residential area with average asking sales prices in excess of 2000 a sq m.
In the emerging neighbourhoods, Manastirski Livadi saw the largest increase, 25 per cent, taking the average asking price above 1000 a sq m. Gotze Delchev remained the most expensive of emerging areas included in the survey, with average prices of 1144 a sq m. In general, prices for properties under construction were approximately 20 per cent lower than for finished buildings.
Rental rates also increased in the second half of 2007, but at a slower pace than sales prices. This meant the profitability of buy-to-let investments was more dependent on capital gains than rental incomes.
While the residential property market in Sofia was enjoying an upsurge, the global credit crisis had caused the main investors in holiday homes in Bulgaria, British and Irish buyers, to withdraw from the market. However, the this was being off-set by a new wave of Russian, Romanian and Scandinavian buyers. The change in buyers had also caused a shift in the type of properties that were being bought towards high-end, completed buildings with more rooms and a higher level of service.
The range of sales prices narrowed in the second half of 2007. Average asking prices were 1210 to 1420 euro a sq m in the mountain resorts, with the lowest average prices being in Pamporovo and the highest in Razlog. In the coastal resorts, the lowest average prices were in Kavarna at 1020 euro a sq m and the highest were in Sozopol, 1425 euro a sq m. Colliers’ research also showed that Elenite had the highest absorption rates in H2 2007 at 84 per cent, while Ravda had seen the largest decrease in absorption, from 65 per cent in H1 2007 to 41 per cent.