Address: Supply Exceeds by 50% Demand in Real Estate Sector

The strong price growth has been the driving force behind the Bulgarian real estate market for years but the present situation on the market is dofferent, according to Katya Tsenova, managing partner and executive director of Address Real Estate.

Supply on the market exceeded demand by 50% in the last two months, which may result in a price correction. Real estate property prices in Bulgaria went up by 17% to an average of 913 euros per sq. m in the first half of the year, data of the company shows.

There has been mixed data on the market in the last few weeks, which is indicative that something new and uncommon is happening.

Rousse saw a record high 26-percent increase in real estate property prices in the first half of 2008. The average price in the city stands at 713 euros per sq. m in the first six months of the year. The economic growth in the city sparked by Romanian tourists and the active construction of commercial centers are among the reasons for the accelerated price growth.

Real estate property prices in Sofia went up by 21% in the first half of the year to an average of 903 euros per sq. m. Plovdiv ranks second in terms of price growth followed by Veliko Tarnovo.

Yambol held the lowest real estate property prices at an average of 402 euros per sq. m. The prices in the city went up by 19%. in the first half of the year. Sandanski and Sliven saw the smallest price growth of 4% in the period January to June 2008.

The demand for two-bedroom apartments continues to be the strongest. A total of 50% of the deals sealed by Address involved such residential properties.

The demand for new developments and prefabricated panel apartments remains the strongest in the big cities. Prefabricated apartments are also the cheapest. The price difference between brick construction and such apartments stands at around 35%.

The real estate market has picked up over the last two months and the difference between the sales prices and the offers for two-bedroom apartments is growing.

Growing prices on the market make apartments in old brick buildings more affordable to buyers and the interest in them is growing stronger. Buyers are even willing to defer the purchase, if the market does not offer the exact type of property they are looking for.

The interest towards construction plots also remains strong. The mortgage crisis that affected the European countries brought in Bulgaria investors with resources and experience. This resulted in a considerable increase in the number of large-scale projects in the country.

The market is expected to calm down during the summer. The price growth will slow down considerably and in certain segments prices will even start to decline. Real estate prices are expected to grow between 10 and 15% in 2008.

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