/ world at this time information/ Bulgaria continues to be monitored by the European Fee as a consequence of extreme financial imbalances
Bulgaria is among the many European nations with an alarmingly overvalued actual property market. Housing costs in our nation are rising at one of many quickest charges within the final two years in Europe, which is worrying in opposition to the background of excessive indebtedness of companies and households. That is what the European Fee warns in its newest report on nations with extreme macroeconomic imbalances.
For the primary time, the European Fee warns of a disturbing rise in property costs in our nation. Our consultants have additionally just lately sounded the alarm concerning the emergence of a brand new property bubble. In response to Eurostat information, housing costs rose by 12% within the second half of 2016, and by greater than 8% within the first and second quarters of this yr. Comparable double-digit development was reported 10 years in the past, after which the collapse of the true property market of 2008-2009 got here.
To date, the prediction of the brokers that the market will relax this yr has not come true. The development of rising housing costs is most pronounced in Sofia, however properties are additionally rising in worth in Plovdiv, Burgas, and Varna. Within the capital, the common stage is round 1,000 euros per sq. meter, and within the middle and a few southern districts, costs attain 1,500 – 3,000 euros. Even for brand new tasks which are within the excavation section, there are already provides for 1,000 – 1,500 euros per sq. meter in sure areas.
Such costs are extraordinarily dangerous as a result of the cheap interval for paying off the funding is exceeded, financiers say. And the data on numerous transactions and on the identical time numerous empty houses exhibits that many properties are purchased exactly for funding functions – for renting or subsequent sale. The rationale for this conduct is the document low rates of interest on newly granted mortgage loans, which already attain a mean of 4.2 – 4.5%. On the identical time, as a result of virtually zero rates of interest on deposits and accelerating inflation, it’s logical that purchasing a house is taken into account a safety of financial savings. Lately, actual property companies reported, for instance, that the Bulgarians are already efficiently competing with the Russians in buying trip properties, with probably the most sought-after flats of 60 – 70 sq. meters at costs of 600 – 700 euros per sq. meter.
Consultants within the trade predict that costs on the true property market will attain equilibrium inside a yr or two. This additionally applies to workplace house costs, that are at present rising as a result of enormous demand from corporations for outsourced enterprise companies. Nonetheless, in line with development corporations, the chance that greenfield tasks can’t be applied at such excessive costs is changing into higher. This, in flip, creates the hazard of a brand new explosion of intercompany indebtedness.
It’s exactly the excessive indebtedness of the personal sector that’s indicated as an alarming symptom within the report of the European Fee. The share of non-performing enterprise loans stays vital, in line with Brussels consultants.
Bulgaria fell into the worst group of the unfavorable rating for financial imbalances in 2015 due to the KTB disaster. Our nation will stay underneath shut surveillance in 2018 as effectively, the EC introduced. One other 11 nations stay underneath “in-depth evaluation” – Germany, Eire, Spain, Italy, Cyprus, the Netherlands, Portugal, Slovenia, France, Croatia and Sweden. Finland is dropped from monitoring.
The report recollects that in February 2017 the European Fee discovered that in Bulgaria the conventional functioning of the economic system is hampered primarily as a consequence of quite a few unresolved issues within the monetary sector, excessive inter-company indebtedness and labor market issues. Consultants now consider that there’s an enchancment in some indicators, however the monetary sector stays problematic and may stay underneath statement. The issues are round its still-weak governance, asset high quality and oversight.
The report studies an enchancment within the labor market – employment is rising and unemployment is lowering. Nonetheless, structural issues stay unresolved, such because the excessive fee of long-term unemployed and the mismatch between labor provide and demand. That is the rationale for the inadequate improvement of human capital, which may have severe penalties on employment. Youth unemployment falls by about 10%, however the share of younger individuals who neither examine, work, nor search for work stays excessive – 15%. Brussels states that the proportion of individuals vulnerable to poverty and social exclusion additionally stays a priority. This downside exists in half of the noticed nations, however the state of affairs is most alarming in Bulgaria and Romania, the place 40% of the inhabitants faces such a danger.
On the identical time, wages and labor prices are rising forward of the dynamics of the economic system. The expansion in incomes is principally as a consequence of labor shortages in sure sectors and the federal government’s plans to extend the minimal wage in 2018-2020, the report highlighted.
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