The slowdown in Bulgaria's real estate sector is already a fact that is easily identifiable even to the untrained eye. The number of the empty apartments in residential buildings that appear to be completed is considerable.

There is an ever increasing number of buildings, which have been under construction for 2-3 years and are in their final stage before completion, that boast For Sale and To Let signs. Something not that typical for the initial construction stage.

All of a sudden it turned out that there is a considerable supply on the market, which definitely is a new trend. Two years ago suitable apartments at an advanced construction stage were difficult to find.

Back then most apartments were bought off-plan, while the difference in the price in their initial construction stage and upon their completion reached even 20-30%.

This could be put down to the fact that the demand considerably outpaced supply, the prices were in their initial, or should we say, medium stage of increase and the country was subject of speculative interest by foreign buyers before its EU accession.

Many local investors, also bought residential properties with speculative purposes. Bulgaria was the country with the fastest growing real estate prices in the world last year.

The considerable increase in real estate prices attracted a large number of entrepreneurs and the term real estate developer became more commonly known in the country.

The number of constructions permits rose severalfold on an annual basis and the prices of land plots skyrocketed. Real estate developers' costs, however, are growing along with the accelerating inflation, and the growing prices of commodities, construction materials and the salaries in the country.

A considerable number of new residential properties will be launched on the market in Sofia in 2008 and 2009. Residential property price growth started to slow down considerably, which is only logical, provided the fact that they are becoming less affordable against the backdrop of the incomes of the population.

The slowdown in the price growth may also be partially attributed to the crisis on the European real estate markets and in the Central and Eastern European countries, which keeps foreign investors at bay. The number of apartments on the market in Bulgaria, that were purchases with investment purposes 2-3 years ago, will also increase.

Sellers like these pose the biggest threat to the future growth in the real estate prices. They can hurt considerably real estate developers and especially the new ones, whose costs are considerably higher in the last year.

A similar prospect might result in a considerable slowdown in the prices of residential properties (due to the higher costs for real estate developers and higher salaries), if not send them lower.