There is a tendency to calm down and stabilize the housing market in Sofia. There is no more panicked demand, no more periods that are extremely saturated as deals. The construction cost of residential properties continued to rise in 2023 due to higher labor costs, but in 2024 no major changes are expected in the prices of “new construction” housing. This was stated by Asen Chavdarov, managing partner in a real estate company, in the show “Properties” with host Hristo Nikolov.
From January to September this year, nearly 22,000 transactions with all types of properties were registered in Sofia, which is a 10% decrease compared to the same period in 2022. Registered contractual and legal mortgages decreased by nearly 4% in the first nine months of this year.
“I would agree with the comments that people on low and below average incomes are finding it difficult to participate in the housing market at the moment because of the high prices. Banks continue to be liberal in terms of mortgage lending, but in terms of the purchasing power of the population there are negative trends,” said the guest.
The most common questions from applicants for a new home are whether their income will allow them to pay the monthly mortgage payments. Other concerns are related to the prospects for preserving the workplace and the processes in the Bulgarian economy, the interlocutor explained.
After the pandemic, a trend began to build groups of houses and closed complexes in the suburban areas of Sofia – mainly in the southern and eastern direction. According to the guest, in an effort to quell the tension on the subject of “redevelopment”, the Metropolitan Municipality is trying to process plans under Art. 16 of the Law on Territorial Development (ZUT) to urbanize territories in suburban areas, to plan them in a more structured and professional manner, with clear plans for street regulation.
The municipality is trying to make territories in the city itself interesting for investors – again in the southern and eastern parts. The goal is to get out of the residential complexes, where there is tension during the realization of new buildings, explained the entrepreneur. According to him, the area between Mladost residential area and Gorublyane district will develop in the coming years with a concentration of housing construction. It is expected that the projects in the area will be unblocked with the extension of “Copenhagen” Blvd (from “Tsarigradsko shose” to the area of Mladost 3 metro station), the construction of which is expected to start soon.
“Investor interest will follow the infrastructure. The Sofia Municipality is trying to direct interest to the northern territories as well, but there the market principle is merciless. Where there is initially no interest from the buyer of a property, it would be difficult to create one. The development of the northern part of Sofia was thesis during the election campaign, and this is somewhat correct. A city cannot develop unbalanced. It cannot have territories that are lagging behind in terms of infrastructure, and at the same time have other parts in which there is excessive interest.” he added.
Certain building materials have been under strain since the start of the war in Ukraine, but supply chains have now calmed down. However, the construction cost of residential buildings continued to rise in 2023, maintaining the trend of the last two years. The prices of materials have already calmed down, but this year labor costs came to the fore, explained the guest.
The housing market in 2024 will depend mainly on the behavior of the banks, and my expectations are that there will be no major changes in mortgage lending. Chavdarov predicts that no large increases in the prices of newly built homes are expected.
When asked whether the real estate market in Bulgaria would suffer after joining the Eurozone (with a target date of January 1, 2025) and an increase in interest rates, as happened in Croatia, he commented that this would not be a problem if incomes in Bulgaria rose continued.
See the entire conversation at Bulgaria ON AIR video
Working on the post:
2023-12-20 17:39:00
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