Experts predict housing market will cool down in 2023

Experts predict the housing market will cool down in 2023. The trend is already noticeable. House prices in Sofia are forecast to fall by 10%. The dynamics of prices and the decisions taken by central bankers will also determine the size of housing loans. The construction industry hopes that inflation will be contained in the coming months.

Reduced demand and income growth, which lags behind property prices growth are pushing housing prices down, but at the same time rising construction output and labour costs are pushing prices up. The most expensive properties (price per square metre) are in the "Doctor's Garden", "Izgrev" and "Yavorov" residential districts, but in much of Sofia, average prices are not falling below 1,000 euros per square metre, and the situation is similar in the coastal city of Varna and the country’s second largest city of Plovdiv, although prices are slightly lower.

The chief economist at one of the leading banks expects a drop in housing prices in Sofia by about 10% compared to the levels of the third quarter of this year.

"If this happens in the context of some increase in household incomes, it means that housing will become slightly more affordable next year, which is good news," said Kristofor Pavlov, chief economist at a bank.

Some people will put off buying a home for about a year, property agencies predict. However, this will not shift these people to renting permanently.

"In the long term, if loans stay at affordable levels, 2.5 to 3.5% a year, if incomes continue to grow to catch up with average European income levels, buying property will permanently prevail," said Anton Andonov, executive director of a property agency.

However, this is the positive scenario for the market. In the negative, there are rising interest rates, bad loans, recession and even the risk of a market overcooling.

"A shallow and short-lived recession, which the Bulgarian economy seems to be heading towards, in the context of what is happening in Europe, is good news for the real estate market because it will cool down the market," said Kristofor Pavlov.

Banks may limit the size of loans for investment purposes to 50% of the price of the property, and for a first home to 75%, Pavlov explained.

Enquiries for the purchase of an apartment have risen by 15%, developers report, but despite this, transactions are down by 10-12%.

"There is a need for housing, so viewings and enquiries are increasing, but the opportunity to buy a home is decreasing," said Eng. Georgi Shopov, chairman of the National Association of Building Developers.

Inflation of building materials ranges between 50 and 150% for different building materials, and increased labour costs also affect final prices.

"For residential construction, we are talking between 50 and 150% prices of building materials, which gives about 60-70% of the product value," said Eng. Ilian Terziev, Chairman of the Bulgarian Chamber of Builders.

Deals for buying properties off-plan are increasing, but the construction industry also warns of possible frauds.

"The price of ready apartments is so high that it is unaffordable for the customers, while an off-plan property price, which is by 20-30% cheaper, is more affordable," said Eng. Georgi Shopov, chairman of the National Association of Building Developers.

"I advise all those who are going to buy off-plan to use the register of the Bulgarian Construction Chamber, which includes all construction companies that are working and that have permits to carry out construction works in our country and to check in advance the companies that will build their future home," said Eng. Ilian Terziev, President of the Bulgarian Construction Chamber..

Terziev expects this trend to continue next year, but not at the same pace.

Чуйте последните новини, където и да сте!
Последвайте ни във Facebook и Instagram
Следете и канала на БНТ в YouTube
Вече може да ни гледате и в TikTok
Намерете ни в Google News