Will there be an increase in real estate market prices?


In the current economic situation, the question of real estate prices concerns everyone considering buying a new home.

In the first half of 2023, there is a decrease in the number of concluded transactions. Their number in the four major cities of the country – Sofia, Varna, Plovdiv, and Burgas, is decreasing, with the largest annual decline in the first three months of 2023 in the seaside capital (-19% compared to an average of -9% for the country).

The supply is also starting to slow down, especially in the capital, as there is a decline in new construction started in the second quarter. This is also the reason for the phenomenon of declining number of real estate transactions while prices continue to rise, albeit at a slower pace.

The demand for real estate surpasses the supply

“In the last two years, we have been observing a gradual increase in property prices. The huge demand does not lead to a decrease in prices. The demand itself exceeds the supply multiple times. This shows that real estate prices will continue to gradually rise,” commented Marian Yordanov, office manager at “Renaissance” office in “Nov Dom 1” real estate agency.

Therefore, in the short term, a significant decrease in property prices is not expected, as the demand still surpasses the supply and mortgage rates have not increased significantly yet.

In the medium term, however, according to experts, market prospects depend mainly on the interest rates of the local market. While inflation affects purchasing power and the ability of households to repay mortgages, it also stimulates investment interest in real estate purchases. This is supported by the substantial weight of bank deposits in the overall financial wealth, which in turn encourages demand, especially against the backdrop of currency depreciation, as people will seek alternatives to hedge against inflation, writes money.bg.

The impact of inflation

Another determining factor is the prices of the construction materials themselves, as well as labor. Logically, their increase leads to an increase in the value of the finished property.

“The inflation index has risen, leading to an increase in the prices of all essential goods and materials. We are talking about electricity, fuel, construction materials, and subsequently labor,” adds Marian Yordanov.

What should we expect?

Of course, the mentioned so far is just a forecast and should not be perceived as a constant. The real estate market is currently stable, with no significant price fluctuations. There is no expected increase in interest rates on loans by the end of the year. The real estate market depends on various factors and can change at any moment.

In the long term, with the upcoming entry of Bulgaria into the eurozone, a significant increase in property prices and income from them is expected. In every country that has joined the eurozone, property prices have risen.

In order to minimize the risk of making a wrong assessment that could lead to financial loss, it is safest to turn to a real estate agency. Nov Dom 1 stands out with its resourceful approach to its work. The agency mediates in the realization of purchases, sales, rentals, and real estate investments in Varna and Sofia. You can receive professional consultation and assistance in obtaining a bank loan.

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