Why Bulgarian Residential Property Prices are Still Rising?
The increase in residential Bulgarian property prices in the
recent months has brought a disgusting amount of media coverage
of the market these days. You can actually read articles about
their property investment in almost all daily and weekly
newspapers and magazines. Property investment has become an
attractive topic even to government officials, whose public
statements have caused even more increased hustle around
residential property investment prices.
The Bulgarian property investment market is just another free,
unregulated market, where the mechanisms of supply and demand
command the movement of prices up- or down. At the same time,
their unique property investment market has some specific
characteristics all its own, which make it an extremely unique
market. Some of these characteristics include: their lack of
sufficient information; a reaction lag when it is compared to
the other sectors of the economy; non-standard product; lack of
a mobility of properties, in addition to, buyers and sellers;
and a limited number of transactions that are available in one
person’s lifetime.
What this means is that the smooth mechanisms of their free
market economy would be influenced by all of these factors and
should be seriously considered when you are analysing the
property market for your investment. Any economics student these
days would tell you that prices rise when either supply shrinks
or the demand for something increases. What has happened on the
Bulgarian property investment market this year in particular is
that both supply and demand have grown significantly with demand
outweighing supply and therefore leading to higher sales prices.
What is more interesting than this is what has actually caused
this demand to grow at such a pace in the first place. The size
of the population, their combined disposable income,
availability of mortgage credits and government actions can
influence demand for residential properties is directly
responsible for this.
The population of Bulgaria has been decreasing slowly in recent
years, but at the same time the poor economic conditions in the
countryside have forced many Bulgarians to move to the bigger
cities for in search of cheaper establishments. This has led to
an increase in the number of potential buyers of property
investment in Sofia and the bigger cities. Thanks to this the
property investment market has been its most active in these
markets and is expected to continue to be in the short and
semi-long term.
The number of people is not a sufficient reason in itself for
the increased demand for properties; the disposable income of
households is an extremely important factor as well. The steady
economic growth of the Bulgarian economy over the past few years
has allowed some portions of Bulgarian society to be able to
earn and save more money.
Disposable income of Bulgarians is even more enhanced by the
availability of mortgage loans where there wasn’t any before.
Although interest rates are still high at 8.5 to 12.5 per cent a
year, many Bulgarians have taken this opportunity to be able to
enjoy a new home now rather than wait for the right amount of
money to be accumulated in 10 to 15 years. The increased
competition between all of the commercial banks will cause even
more interest rate drops and stimulate the demand for
residential properties in the future.
Category : Currency Trading
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