PERFORMANCE OF HOUSING MARKET IN BULGARIA

The Performance of Housing Market in Bulgaria under Conditions of Transitional Economy

A part of the EU since 2007, Bulgaria balances old and new in an environment where ornate medieval churches, beautiful mosques and villages that have changed little over the centuries co-exist with the contemporary infrastructure of its cities and impressive sea and mountain resorts. From the snowy peaks of the Balkans and popular hiking trails to the inviting white sands on the Black Sea coast, this small country has a lot to offer. Health conscious and ecologically aware visitors are drawn to the country's well known therapeutic resorts, mineral springs and organic farms.

From rural farmhouses and cottages in picturesque hills and valleys to modern apartments in historically resonant Sofia and condos and villas in the Black Sea beach resorts, there's an interesting variety of residential real estate to be found across Bulgaria. The good thing is that modern properties in Sofia and other cities, in the glitzy Black Sea resorts and the popular ski resorts of Pomporova, Bansko and Borovets in the Balkans as well as charming, old houses in the countryside are generally significantly cheaper than in other countries in the EU.

The costs associated with property transactions in Bulgaria are generally much lower than in developed economies, in spite of the problems that can arise, as are the running costs or the costs of refurbishment or improvement. All properties are bought freehold and more than 90% of occupied residential property is owner occupied.

Following Bulgaria's transition to a market economy the development of the retail housing market has been difficult but steady and, with the initiatives to increase tourism, a large number of new construction projects have already been commenced along the Black Sea coast.

The real estate market in Bulgaria is (after ten years of transition from communism to a functioning market economy) just now starting to approach the conditions that already exist within more developed countries with respect to the processes of its own creation, market realisation and operation and to quantify it now as an emerging and independent new branch of the economy is probably quite valid.

For the first time a Real Estate Market Index was published in October of 2002, which in March 2003 reached 104.37. A small beginning but potentially the start of a longer-term trend.

Property and land prices are without doubt good value in Bulgaria. This may be due in part to the general historic neglect of its asset markets and also because the Bulgarian currency (the Lev) is undervalued. In addition, the current restrictions on a foreign persons ability to purchase title to land is further affecting the liquidity of the market.

With increased purchasing power will come product and asset price inflation. On the Black Sea coast this will additionally be fuelled by further growth in tourism with the increasing realisation of Bulgaria as being an acceptable alternative to say Spain, Portugal or Greece as a holiday destination and by increasing activity in the ...