Analysis of the real estate market in 2023 and forecasts for 2024

The market in 2023 

Last year, the average growth in housing prices in Sofia, Plovdiv and Varna reached 11%, according to the data of most real estate agencies. There is also an increase in prices for rents in Sofia and Varna by about 16% - from BGN 760 per month for a two-room apartment at the beginning of 2023 to BGN 900 per month at the end of last year and the beginning of this year. For three-room apartments, the increase is from BGN 1,100 to BGN 1,300 per month.

People between the ages of 30 and 50 working in IT, finance and medicine are most active in property purchases. More and more young people, born after 1994-1995, are entering the market with the intention of buying their own home. They finance their purchase with a bank loan that equates to an average of 50% to 80% of the property's value.

Internal migration is one of the distinct trends in 2023. In Sofia, the greatest interest in buying a property came from residents of Blagoevgrad, Haskovo, Pleven, Stara Zagora, Plovdiv and Veliko Tarnovo. Citizens of Targovishte, Dobrich, Razgrad, Silistra and Ruse have focused on buying properties in Varna, and the housing market in Plovdiv has attracted buyers from Smolyan region, Pazardzhik, Dimitrovgrad and Haskovo.

Forecast for 2024 

Forecasts point to a stable year, with the number of transactions remaining at the level of 2023 and smooth growth in new construction and quality property prices of between 2% and 6% in major cities. The cause for optimism is the slowdown in inflation, the slight preponderance of demand over supply and his expectation that mortgage rates will not rise sharply this year. According to him, raising interest rates by between 0.6% and 1% will not have a significant impact on the behavior of buyers. It is possible that some of them will prefer to live in rent, which will stimulate the rental market.

If banks tighten their requirements on buyers about deductibles and income levels against the mortgage payment, this will limit the number of buyers who will enter the market, currently only half of the transactions happen with mortgage lending. The rest are financed with the buyers' own funds. A cooling of the market can happen sooner if interest rates on housing loans double, i.e. if from their current average of 2.61% they go to 5.25%. Part of the buyers have set aside additional funds in their budget for such development and would not give up a purchase decision.

9% of properties on the market are overvalued 

In 2023, the share of overpriced apartments on the market in large cities in our country was between 7% and 9%. The sellers of these homes had to drop the price to get a deal. The average discount for two-room and three-room apartments last year was between 5,000 and 10,000 euros. In the last three-four months of 2023, however, the discounts have been fewer in number and size.