Dear Valued Stara Planina Properties Client,
Firstly we would like to wish you a very happy and prosperous New Year 2008!
|2007 Bulgarian Property Market Review ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Different sectors of Bulgarian property market performed differently during 2007.|
The strong rise of property prices in the main cities and towns exceeded the predicted 15- 20%. This was a result of three main factors: first it is a continuation of the momentum which had built up in 2006 in line with increases in property prices globally (lets remember that Bulgaria is now part of a global market). Secondly, EU accession created an acceleration of these trends as many people and companies made decisions to invest once EU membership was a reality - this applies to commercial property as well as residential. Thirdly, a strong domestic economy has provided a local demand for housing, retail and office property.
The market in the biggest resort areas such as Sunny Beach, Bansko and Pamporovo slowed down and the prices have plateaued and even decreased in case of properties located away from main facilities. On the other hand there was increased interest in luxury holiday properties by Russian buyers in the Black Sea resorts.
After many years of talk the Super Borovets project started in the autumn. It seems that the local authorities have done well and planned the infrastructure first to suite the needs of the holiday dwellings which will be built afterwards. Let's hope that the lessons from some other resorts (and mainly Pamporovo where most of the infrastructure still has not been built) have been learnt and it will not be necessary to cure the defects in years to come.
The market in the rural areas moves from cheap houses towards properties with more facilities. The supply is huge and not all is in areas with good infrastructure. Market in villages with easy access to facilities and in good areas will develop faster. During the last year there has been more interest to purchase rural property from foreigners who consider to move permanently to Bulgaria within few years time rather than those who buy to invest. It is fair to say that in general prices are stabilising in rural areas and it is now a buyers market.
How will the market develop in 2008? In 2008 the Bulgarian property market will suffer some problems related to its rapid growth, the global credit squeeze and a drop in the property market in the UK which will discourage UK investors to buy overseas. Firstly there is strong evidence of over supply of investment/holiday apartments along the Black Sea and some ski resorts. There are severe infrastructure constraints which also will put off some buyers.
The property market will develop towards improving the management services and in many locations only now people will start to think about development of market and services related to the holiday rentals.
Secondly, the global credit crunch will put an upward pressure on interest rates which will effect the availability of mortgages in Bulgaria. This may have a dampening affect on mortgage demand and domestic residential property.
In this situation it is difficult to predict to what extent prices of property in Bulgaria would be influenced by the global crisis. Our anecdotal evidence is for a drop in prices in major resorts, increasing prices in urban areas and their immediate hinterland and leveling off of prices in most rural locations. Prime locations - such as central Sofia, and other main cities will hold up well due to a combination of continued international and domestic demand.
Property prices are just one side of the coin and the property industry should not focus only on the issue of prices rises - especially when this is at the exclusion of other important objectives such as the quality of the built environment, and the ability to provide homes and housing to all the population.
The function of any market is, after all, to provide a mechanism for the distribution of goods or services to society - in this case a successful housing market could be judged by its ability to distribute homes and housing to those who need it. Furthermore, these homes should be of good quality, and in places were people want to live and which contribute toward modern sustainable cities.
The concern with property booms is twofold. Firstly the rise in prices can make housing unaffordable to whole sections of society. For those who can get on the property ladder, fine. But for those who cannot, the lower rung becomes ever higher. Secondly, it can encourage poor quality and inappropriate over- development in the rush for profits. When these things happen, the property market begins to fail in its function of distributing quality homes to those in need.
Of course profits are essential to the workings of the market to encourage the development of professional companies, innovation and competition - but profits should not be at the expense of the other important elements mentioned above.
In the UK and Bulgaria this has become a serious problem, with the ratio between earnings and house prices at very high levels. In Bulgaria, the widespread ownership of property and the extended family unit has to some extent reduce the negative impacts as each family seems to own one or more properties. However, it has been reported recently that the earnings:house price ratio in Sofia makes it one of the the most expensive cities in Europe, which cannot be a good thing in the long term.
The Best and the Worst for Bulgaria in 2007 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~The best of the 2007
The Six Bulgarian Medics Sentenced to Death in Libya Returned Home
Bulgaria Wins Battle over Euro Spelling
The worst of the 2007
Unusually Warm and Dry Winter Ruined much of the Agricultural Harvests
People of the Year
Bulgaria's Meglena Kuneva swore in as a European Union Commissioner for Consumers Protection on January 22. The festive ceremony took place in the Court of Justice the European Communities on Luxembourg. For years Meglena Kuneva has been the face of the campaign for Bulgaria joining the EU.
European Union External Relations commissioner Benita Ferrero-Waldner and former French first lady Cecilia Sarkozy played crucial role in the return of the Bulgarian medics. The medics flew back to Bulgaria on board the French President's airplain after long-days negotiations with the Libyan authorities.
Bulgarian marathon swimmer Petar Stoychev became the fastest man to swim across the English Channel. He was first to record a time of under seven hours. Stoychev has won the Open Water World Championships seven times and has long targeted the English Channel record.