Dear Valued Stara Planina Properties Client,
Firstly we would like to wish you a very happy and prosperous New Year 2010!
2009 Bulgarian Property Market Review
There has been much talk around the world of falling property prices in 2009 and this is certainly the case in Bulgaria. The catalyst is the so-called economic crisis that emerged on the scene towards the end of 2008. We actually found the previous year 2008 also to be a weak year in terms of business. This was due mainly to the worsening of the Pound Sterling to Euro exchange rate. In 2008 many of our buyers, mainly Brits, found that their Pound Sterling had dropped by nearly 30% from its peak against the Leva (pegged to the Euro). This made property in Bulgaria relatively more expensive to the Pound Sterling. Whilst this negatively affected our buying clients it was of course a positive reaction for those Brits that were selling property in Euros they had bought previously in Bulgaria and taking the money back to the UK in Pound Sterling. So what has happened to prices in 2009 and what are the prospects for 2010?
The overall picture is of falling prices and the expectation in early 2010 is for further falls with some leveling out of the prices towards the end of 2010. As an average figure prices have fallen by approximately 35%. This is based on actual sale prices not asking prices. This is important to highlight because many properties are still marketed at pre-crisis prices and there is a great margin for negotiating down the asking price. Of course this is just an average price. The worst hit market has been the new builds along the coast (especially in the Sunny Beach area) and in the ski resorts. Price falls have been up to 50%. Prices in rural areas have fallen by on average 35% whilst the urban areas have seen falls on average of 30%. It is a pretty grim picture and in fact there are many so-called distressed sellers in unfortunate situations where they are forced to sell at levels even lower than 50%.
As all the talk is of the world economy pulling out of the crisis Bulgaria still remains immersed in economic strife. The crisis hit Bulgaria late and its effects will linger longer. For this reason prices are likely to drop off further in early 2010 with analyst predicting a recovery in the economy from mid 2010. It is unlikely that prices will pick up fast or indeed recover to pre 2008 levels for sometime to come.
From where we stand now the likelihood of another Bulgarian property boom is very unlikely which is not altogether a bad thing. When a bubble is built everyone expects it to burst and eventually it does. Our client base in the last year has changed. Prior to 2009 it consisted in equal share between lifestyle buyers (i.e. those looking to relocate or to use the property for personal reasons) and investment buyers (i.e. those looking to buy to make profit and no other reason). Now the lifestyle buyers are the dominant sector. I suspect in 2010 there will be a recovery in the investment buyers as prices bottom out and bargain hunters start to tip their toes into the market again.