The housing market in Varna is becoming more expensive and predictable

After a period of crisis with a high supply and limited demand, which led to a 30% drop in prices, a steady upward trend was observed at the end of last year. The factors influencing the change are mainly the massive supply of housing loans with interest rates below 4%, the still limited market for newly built dwellings and the growing number of potential buyers.
However, the news about the Varna market is that while a year ago or two main engine of trade was Russian citizens looking for housing mainly in the high price segment, now about 95% of real estate clients, even in the vacation sector, are mainly Bulgarians.

Loans, of course, are a solid factor for the positive trend, but what strongly affected the market in Varna is the dynamics in the trade of agricultural lands at good prices in the region. Increasingly our customers are people from small settlements that migrate to settle permanently in the district center.

The company's statistics for the period from the beginning of the year to the end of October show that three-storied housing in the areas with easy and fast communication to the city center are already offering about 30% higher prices.

According to realtors, the decline in demand for residential properties is not in any of the regions of Varna. The tendency it outlines is rather a marked reduction in the so-called secondary property market at the expense of interest in new homes.

By the end of 2016, the aggregated data of several of the major real estate agencies in Varna indicated that buyers are targeting deals at levels of up to 100 and over 120,000 euros per home. Only a year earlier, demand was mostly oriented to properties in the price range of 50-70 thousand euros. But along with the cost one of the most important criteria in choosing a home is already the quality of the construction works, the parking space and the good common parts.

The segmentation of buyers, based on clear requirements for their new home, is becoming increasingly clear.

A part of our clients are looking for a considerably larger living area at a lower price, say a one-bedroom apartment for about 40,000 euros or a two-bedroom apartment for no more than 60,000 euros, "says Elena Parova." This is a clear sign to us to direct the supply to properties in the big residential districts of Varna as "Vazrazhdane" and "Vladislav Varnenchik". Another type of customers are those who also have a clear vision of their future property but also have a larger budget - from 90 to 150 thousand euros.

Currently, the price of residential properties in Varna determines the location rather than the size.
Thus, not very large dwellings near the Sea Garden or the Greek quarter are already permanently sold for about 1200 - 1500 euros per sq.m. There are even sales at prices that reach 2 thousand euros per square meter in those parts of the city, but here we are talking about really unique locations.

The interest of solvent clients is no longer so clearly oriented to prestigious areas such as Trakata and the resort of St. St. Constantine and Helena according to the observations of the brokers. In the recently designated hits around Evksinograd Palace, Kabakum beach or Alen Mak area near Varna is currently almost zero.

Currently, the market is nice, so do the experts say. One of its advantages is that there are clients for all types of properties. Buyers in areas like Trakata and St. Nicholas have a different profile. These are families that feel free - with grown-up children, stable income and basic housing in the central part of Varna. But although there are already a lot of newly built buildings in these areas, there is no noticeable interest in them compared to previous years.

Over the past year, real estate agencies in Varna have been growingly interested in one- or two-bedroom dwellings near urban transport routes and large supermarkets even though they are away from the city center. The example is given by the residential area "Briz" located in the northern periphery of Varna, but close to the Sea Garden and the motorway to the Golden Sands resort.

Data from the Registry Agency shows that the number of green deals made for new buildings continues to grow. This trend also gave birth to the joking term "deal in dark green".

- reservation of property prior to construction permit, ie. still in the design phase.

A trend of the last year is also the return of confidence in residential properties as an investment opportunity. According to real estate agents in Varna, over 70-80% of investment deals are with apartments because they can be easily rented as opposed to houses, shops or agricultural land.

According to forecasts made at the end of last year, property investors for rent or resale are a serious player in the new construction market in Varna. But green purchases are not recorded in the registers, and growth in this type of transaction reported by the Registry Agency will become known at the end of this and next year after the completion of the new buildings.

It is this interest and is the most logical explanation for the fact that the demand for construction plots has already returned to 2008 levels. Areas are sought not only in the central part of Varna.

The dreamed plots are those that allow a built-up area of 2-3 thousand square meters.

The profile of customers looking for green investment shows that the decisive factor in the deal is the quality, the business history of the construction company and the way of payment. Buyers of dwellings in newly-built buildings have higher requirements that can not be covered by the properties on the secondary market. At the same time, the apartments in the construction stage give them extra freedom - they can be remodeled and adapted to their specific requirements. After that there are a living room (combined living room and kitchen) of 35 - 40 sq.m, parking place, etc.

The possibilities for deferred payment of the newly built residential properties in the central part of Varna raise their prices to levels above those of the completed dwellings. At the same time maintenance fees in the closed complexes north and south of Varna continue to be a brake on the interest in luxury properties. They range from EUR 5 to EUR 10 per square meter of living area, depending on the type and volume of infrastructure serviced.

The real estate agencies in Varna with nostalgia recall the "wonderful 2007-2008",when the market was determined by Russian and British investors mainly in holiday properties.

Agencies' data from the end of last year showed "frost" in this market as well. The lack of search was mainly explained by the withdrawal of buyers from abroad - mainly Russia and the UK. On the other hand, it was a brake on Bulgarian buyers and then the fees for servicing the common parts.

The Russians who invested a while ago are already sellers. Most of them end up with their properties in Bulgaria and do not intend to look for new ones. At the same time, other compatriots head to homes in the central city area, close to school, the city's transport infrastructure, a large shopping complex.

These are new clients. The summary of the data provided by real estate dealers in Varna outlines three clear trends:

- Bulgarian and foreign buyers already have almost equal demands on the quality and price of their properties in an increasingly rational approach to the choice of their location.

- The supply is still lower than demand, which drives prices up. But it will not last long.

And third: Residential buildings to be completed in the next one or two years are continually increasing. And that will inevitably lead to the moment when supply will exceed demand.