After the country’s entering into economic crisis in 2008 there began serious changes in the real estate market. After three years we can now say that they are now a fact and 2011 has confirmed the new changes in sellers, buyers and intermediaries and has legitimized new rules in this field.
The first major change is in the ratio of supply and demand. While during the real estate boom the practice was every more or less decent property unit in a prestigious neighborhood to be bought immediately after its appearance on the market now the offered units exceed the demand by at least 70%, or for each 10 offers interest is expressed in two or three of them. This led not only to constant lowering of prices of transactions, but also to a change in the behaviour of buyers and sellers. Today a buyer with money is the undisputed number one and every body complies with his rules. The increase in the period needed for a transaction to take place has set the average at over five months – under ideal conditions that the estate meets the needs of the buyer and that he has the means to acquire it. Another is the profile of the buyers – now they are people aged 32 to 45 years with good and relatively secure jobs with pays above average who can cover at least 80% of the prices asked for the desired property from own funds. Almost all – 98% – in 2011 have been Bulgarian citizens, foreigners have withdrawn and rarely buy.
There is a substantial change in the financing of the transaction – purchases on credit and purchases with own funds now show a ratio of 1:4. This means that only about 25-30% rely on a mortgage or other loan, while the remaining buyers count on own funds to buy homes. This fact predetermined even lower price levels of transactions – the decrease in prices continued in 2011, albeit at a slower pace.
There has been also a significant change in the group of sellers. Now it looks something like – 70% are investors of new residential or office buildings, 20% trade in properties with outstanding mortgage and 7% to 8% are private owners of single property units in need of fresh money. Those who can wait to sell their own property, are just waiting. Or rather – they ask a high price that is unrealistic and is just there as a market participant but not real player.
Perhaps the biggest change is in the group of intermediaries – there are no longer individual brokers working from their kitchen. Ten others are larger agencies, most with subsidiaries in the country and more so in every major regional centre with positions in their region. The role of specialized websites and specialist publications was severely limited. The commissions that brokers ask are almost the same percentage of the deal but substantially smaller in amount due to the decrease in prices. Some segments of the market are even advertising sales without commissions to the buyer, since the fee is borne by the seller. And in many cases, investors sell their own property in newly built buildings, namely to avoid the commission and to ensure that the transaction price is real. Most agencies have adopted rules that were unthinkable before – for example, intensively apply the so-called open day in which a dwelling or building with multiple properties can be visited by interested parties in the presence of a representative of the developer to discuss possible options for purchase. Some investors have also introduced special free seminars for prospective buyers, where they present price information and advise what is worth to be bought and what-not. Along with everything else available and intercompany loans for purchase or lease.
Changes in the real estate market in our country will continue taking place insiders say. The new 2012 will certainly be no easier and successful. Prices will remain under pressure, and stagnation in the construction of new buildings will begin to be felt in the sale bids. More deals will become possible though personal funds only, which in turn limits their number and price levels. Only in a few of the largest cities, to which there are still migratory flows: Sofia, Varna, Burgas, Plovdiv are likely see temporary stabilization of prices and number of transactions. In the remaining settlements the decline will continue, but the withdrawal of investors from the construction of new buildings will increase.
