After five years of strong house price rises, Bulgaria’s housing market remains strong, buoyed by low interest rates and a stable economy.
The nationwide house price index rose by 7.29% (3.56% inflation-adjusted) during the year to Q1 2019, following y-o-y rises of 5.54% in Q4 2018, 6.27% in Q3, 7.51% in Q2 and 7.09% in Q1, according to the National Statistical Institute (NSI). During the latest quarter, house prices increased 2.62% (1.42% inflation-adjusted) in Q1 2019.
- Prices of new dwellings rose by 11.9% (8% inflation-adjusted) during the year to Q1 2019, sharply up from the previous year’s 2.3% y-o-y rise. During the latest quarter, prices of new dwellings increased 5.7% (4.4% inflation-adjusted).
- Prices of existing dwellings rose by 5% (1.3% inflation-adjusted) in Q1 2019 from a year earlier, lower than the 9.7% y-o-y growth in Q1 2018. Quarter-on-quarter, existing house prices increased 1.1% (-0.1% inflation-adjusted).
The almost zero interest rates on bank deposits have encouraged people to invest in real estate, and also encouraged purchases of pre-construction residential property.
Despite strong demand, construction activity remains low. In the second quarter of 2019, newly built dwellings fell by 1.5% to 2,250 units from the same period last year, following annual declines of 3% in 2018 and 10.3% in 2017, according to the NSI.
From 2000 to 2008, Bulgaria had a house price boom, with residential property prices surging around 300%. The bubble burst at the end of 2008. The housing market started to recover in 2014 and house prices have been rising since.
Demand for properties in the major cities continues to grow, and supply is increasingly limited by low levels of new construction.
“The shortage in the supply of completed projects continued during the [first half of 2019]. As a result, 60% of the residential units under construction were pre-sold,” said Colliers International.
Bulgaria’s economy is expected to expand by 3.3% this year and by 3.4% in 2020, after expansions of 3.1% in 2018 and 3.8% in 2017 and annual average growth of 1.2% from 2009 to 2016, according to the European Commission.
European Union citizens can purchase properties in Bulgaria, including land. Before January 2012 foreigners could purchase land only in the name of a legal entity and were not allowed to own a property.