Despite the general economic recovery and the growth in incomes and lending in Bulgaria, the luxury property market declined in activity during the first six months of 2018, according to analyzes of consultancy companies.
While there is a 30% increase in high-end queries, buyers and tenants are experiencing fluctuations in deals because of the rapid rise in prices on the market.
High sales prices in the luxury segment lead to a decline in interest in investment and speculative deals, but demand for residential property remains strong. In spite of the overall stagnation in the market, revival is observed in the neighborhoods of the Vitosha collar, mainly due to the increased interest in building single-family houses in the area.
In the second quarter of 2018, the activity of the luxury housing market remains weak due to high property prices. This tendency is mainly observed in investment deals that have undergone a boom in Sofia. As a result of the increased demand for property for investment, it is often the case that residences are resold several times at ever higher prices. This also affects the rental market price levels, which continue to grow in order to ensure a return on the funds invested in resold properties, analysts note.
Due to the high market prices, the activity in the low-priced properties - between EUR 150 thousand and EUR 300 thousand - is declining. This category mainly concerns apartments outside the central metropolitan areas or smaller dwellings in the center of Sofia. Statistics show that the offer prices of such type of housing often reach 2300-3000 euros / sq m in recent months, which significantly impedes the conclusion of deals.
Such prices are categorically not accepted by buyers and real estate consultants. Dwellings for renovation in the center of Sofia, which in 2017 did not exceed 1500 euros, are now offered for 2000 euro / sq.m. The execution of such transactions is difficult, mainly due to the lack of quality support of the offered properties. Separately, the rise in prices leads to the disappearance of the niche for investment in old housing for repair, which will significantly affect the market, experts say.