More flexible payment schemes to attract buyers

Entrepreneurs in our country are becoming more flexible in their payment schemes in order to attract buyers.

The 20:80 scheme is taking hold in the market and has brought back some of the buyers who exited it at the end of 2022  

Builders in our country have started to offer their clients more flexible financing schemes and this has brought back some of the buyers who left the market at the end of 2022 and the beginning of 2023. Their activity has increased in the last quarter of last year, when for every 100 newly appearing sellers on the market, there were 130 new buyers. This is a change from late 2022-early 2023, when supply and demand were nearly even.

New construction is desired by buyers because of the lower prices in the early stages of projects and the diverse lifestyles they offer. Investors have adapted to the demand and started offering more flexible payment schemes such as 20% on signing a pre-contract and 80% on deed 16. Option to pay 30% of the property price on a pre-contract and 70% after permission for use is also well received by buyers.

Investors who resorted to such payment schemes are now selling quickly and successfully. The rest of the entrepreneurs have to lower their prices to keep up with the competition, or realize their sales more slowly.

According to our observations, most construction companies now rely on bank financing for their projects, as banks still offer loans on favorable terms. This is a significant difference from the period after the 2008 financial crisis, when many construction companies went bankrupt as they relied on pre-sales revenue to finance their projects.

Investors short of financing have pulled out of the market, following a call by the National Association of Builders (NAB) for greater caution in starting new projects. The association recommended that investors secure financing for their projects before starting construction, rather than relying on pre-sale revenue. "This is also visible in the official data - building permits decreased by 20%, and the number of preliminary construction contracts decreased by 35 percent. This will have an impact on the market in the next two to three years."

Active in the new construction housing market are mainly people who acquire property for investment purposes. They buy at an early stage with a view to resale or rent. In Varna, the new construction is concentrated in "St. St. Constantine and Elena", the neighborhoods "Vinitsa", "Vazrazhdane", "Vladislavovo" and "Levski", and the average prices in them vary between 1000 and 1800 euros per square meter.

The tendency since the Covid era to increase the area of ​​the apartments is maintained, and the one-room apartments, which until years ago were particularly popular, are disappearing from the market. Ground-floor homes with their own courtyards and top-floor apartments with panoramic terraces, which have been undervalued by buyers over the years but have become desirable amid the pandemic, continue to attract interest.