NEWS - Latest developments & information

In the first quarter of 2005 there was a further propensity towards a slowing down of the Bulgarian property market - especially in the major cities.

The property prices growth registered for Q1 2005 was 10.6% compared with 11.3% for Q4 2004, 12.0% for Q3 2004 and 12.3% for Q2 2004. Property prices growth in Sofia was even smaller at 5.9%.

BPS believes this is due to a number of factors. At the end of 2004 and beginning of 2005 attempts have been made by the International Monetary Fund to restrict the hyper expansion of bank crediting during 2004.

Some regions have experienced a higher supply of new build properties than existing demand warrants - for example areas such as the Black Sea coast and the capital Sofia.

Expectation for the next 6-12 months is a price growth of 6-10% in Sofia and along the coast and a higher growth for the smaller regional centres. Overpricing and overdeveloped might register negative price growth in some areas during the next 6 months.

The Bulgarian property market still has a long way of "catching up". Compared to Bratislava and Budapest, property prices in Sofia and Varna are still 40% to 100% cheaper.

During 2005 and 2006 the property market will slowly weaken. BPS believes that the divergence of the Bulgarian economy to that of the EU will generate internal pressure on property prices. Stabilising an average growth for the economy of 5-6%.