Brokers report a 30% drop in inquiries for purchasing a new home in Sofia. On an annual basis, the decrease in concluded deals is 15 %.
The activity of the residential property market in Sofia at the beginning of 2023 is slowing down, most visible in the number of inquiries from buyers. According to aggregated data of all agencies, part of the Realto Group, the decline in inquiries is over 30%, but in the actual deals, it is only 15% because buyers are more motivated, reports the luxury property company Unique Estates.
Another visible market change in April and May is related to mortgage loans. After the greater tensions of the first months of 2023, buyers are now more reasonable than worried. This can also be seen in the share of credit transactions, which for the first five months of the year are 55% of all.
In the luxury segment, trophy properties and those that can preserve the value of money are traded. Traditionally, the luxury segment has been significantly less affected by economic changes. Therefore, neither the ups nor the declines are record-breaking, the company notes.
"After a standstill at the beginning of the year, in the second quarter, prices started to rise smoothly again. Buyers' behavior has also changed as the overall rate of increase is commensurate with inflation," commented Vesela Ilieva, Managing Partner of Unique Estates for Economy. Bg.
Prices by quarters in Sofia
The increase in prices in the different districts of the capital is visibly different – a trend that deepens over time. On average, prices have increased by no more than €100 per sqm the amendments being within the statistical error.
In neighborhoods where there is no new construction, for transactions on the secondary market the growth is very small. More significant is it in the new neighbourhoods, where the snowball principle is triggered – new projects of higher quality appear, they attract interest in the area, and interest leads to a rise in prices. This growth has a direct correlation with the construction stage of the project – prices increase as you get closer to a use permit, regardless of external factors.
The rental market in the capital is in an increasingly better phase – a trend that has been noticeable since the beginning of 2023. One of the reasons is the rise in real estate prices along with the expectation of rising interest rates. The increase in rental levels of apartments is over 10% since the beginning of the year. Thus, in practice, they outpace inflation, but despite high prices, demand exceeds supply. Limited housing supply and low unemployment rates are reasons to expect growth in the coming months.
The interest of investors in buying buildings for management purposes is restored. Mainly new projects are selected, where a rental yield of between 3 and 5% can be achieved with a combination of short-term and long-term landlords.
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