Buying property has never been as affordable as in 2024, considering the purchasing power.

Despite the growth of the real estate market: the wage-housing price gap has narrowed from 1995 to the present day.

Despite the ongoing discussions about the real estate market bubble in our country, analyses show that the wage-housing price gap has significantly narrowed compared to 1995. In 2024, buyers are enjoying exceptionally favorable conditions that have not been seen before. With the current minimum wage in our country, which is 933 BGN, and the maintenance of low mortgage interest rates, property acquisition is more affordable than ever, as property price growth is currently frozen. On the other hand, wages have increased, and mortgage interest rates are the lowest in our economic history. As of January this year, banks are lowering them by 2.57, which is the lowest index so far.

Household Income

According to the NSI, the average annual income per household reaches 10,846 BGN for the year 2023, representing a growth of 20.4% compared to the previous year 2022. This increase is part of the broader trend of economic growth over the past decade, during which incomes have increased 2.3 times from 2014 to 2023.

Yordan Yordanov, CEO of “New Home 1”, shares that by the end of 2023, savings in banks amount to 127 billion leva, and by the end of March 2024, they are almost 129 billion, which is again an increase of almost 2 billion. Mortgage interest rates remain low, and logic would suggest a further decrease rather than an increase. At the same time, the labor shortage brings about an additional increase in wages, while the government plans an additional increase in the minimum wage. This means that the average wage will increase, and of course, the prices of goods and services. These factors have a positive impact on purchasing power and provide opportunities for investment in real estate.

Percentage Increase in Housing Prices

According to Pariteni.bg, only in 2023, the housing price index has increased by 9.9%.

At the same time, interest rates on housing loans continue to decrease. Weighted average interest rates on consumer and housing loans decreased in February by 33 basis points to 8.28% and by 3 basis points to 2.55%, respectively.

The YouTube channel “Nepretenziozno” makes a detailed comparison of property prices to the minimum wage from 1995 to the present day. They reach a very interesting conclusion. In June 1995, 878 salaries were needed to buy a property. For comparison, average prices of two-bedroom apartments in the center of Sofia are used – 2,151,600.66 BGN. In the same period, the minimum monthly wage is 2,450 BGN.

By the end of 2023, when the same average price is 226,080 BGN, we only need 290 salaries to invest in real estate.

In order to feel the difference, we present a turning point in the Bulgarian economy – the hyperinflation at the end of 2017. Back then, the minimum wage jumped from 380 BGN to 460 BGN by the beginning of 2017. Consequently, it took us 310 and 298 salaries to buy a home.

You can review the entire database in the video, while current prices

for properties are offered on the website of the agency Nov Dom 1, which sells properties for personal use as well as for investment purposes.

Raising the minimum wage will also raise prices accordingly

The financial well-being of people is always a reason for the real estate market to move up, down, or remain stable. Of course, increasing the minimum wage would further stabilize the quality of life for those relying on it. Its increase certainly should not lower property prices. A more significant increase would likely lead to at least an increase in construction costs in the labor fund, while increased prosperity logically would lead to an increase in property prices, says Yordan Yordanov.

The dynamics of the real estate market and the incomes of the population in recent decades show that despite fluctuations, acquiring a home is more affordable than ever. This trend highlights investment opportunities and improving living standards, which is a clear signal of optimism for the future of the Bulgarian market.