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The Real Value Of Property Is The One Buyers Can Afford

During the first month of 2009, set against the context of nearly 115 000 homes up for sale in Sofia alone, a new tendency, positioning the buyer as the main arbiter, is emerging, Dnevnik daily reported on February 9. National statistics show that every fifth property in the country is now listed for sale. The reason is not only the rapid growth of recently built and seemingly vacant apartment blocks. About 20 per cent of the total supply comes from owners who had invested in real estate, hoping only to reap a profit. Now they are selling in order to release the money invested, according to market specialists from leading real estate agency, quoted in Dnevnik daily. The agency said that many owners who had bought properties recently were now unable to service their mortgage loans. Now they were being forced to sell.Mladen Mitov, a market specialist from the real estate agencies, said, as quoted by the newspaper, that the increasing number of speculative buyers having to sell their property investments has disrupted the balance between supply and demand. Prices have plummeted as a result. Analysis by Bulgarian real estate agencies indicated that fewer deals are being finalised for two main reasons: either the banks refuse to grant the requested loan at the last minute or buyers decide to look for a better offer. Buyers are demanding a "correction" to property prices on the basis that the real value of the property concerned is the price they are prepared to pay.Apartments in communist-era panel blocks are those most advertised for sale, but they attract low interest from buyers. In 2008, only 16 per cent of all deals sealed by Bulgarian real estate agencies involved such properties.

For the last trimester of 2008, the agency reported a 23 per cent decrease in transactions involving panel apartments. Most banks refuse to grant loans for such apartments. The agents were also concerned that many investors cannot find the resources to finish projects. Factors such as the (over)-supply of completed homes as well as the long wait to acquire title deeds deterred potential clients from buying off-plan.The agency said that property deals involving buildings under construction decreased sharply at the end of last year. However, an even larger number of projects involving already sold apartments have been halted. Investors in such uncompleted projects are having to refund customers, a tendency that the Bulgarian real estate agencies hope will continue, Dnevnik daily said.From the beginning of February 2009, a leading Bulgarian real estate agency is introducing a new system of paying commission: the whole amount would be covered by the seller instead of being split equally between the buyer and the seller as it was until recently. Many sellers are now forced to lower their initial asking price by 20 per cent. In normal times the reduction should not exceed five to six per cent.