The pandemic has placed buyers in a dominant position

The pandemic has placed buyers in a dominant position in the housing market in the medium and high segment in our country, according to the consulting company Colliers International.

Among the main reasons for demand in the first half of the year is the need for more housing or the desire to invest in real estate. The focus of buyers is focused on homes at an advanced stage of construction or completed with Act 16. The strongest interest is in apartments with two or three bedrooms, apartments on the ground floor with courtyards and villas near Sofia.

Banks are slowing down the provision of mortgage loans, increasing their selectivity towards borrowers, their profile, deductible rate and collateral.

Some buyers prefer to follow the development of the coronavirus pandemic before making a property purchase. This has a positive impact on the rental market in the direction of increasing demand from both Bulgarian and foreign citizens.

During the period under review, real estate transactions purchased for investment purposes accounted for 15% of all, which is a significant decline compared to 2019, when their share was about 40%.

Average sales prices and rental levels remain stable - the average price for a two-bedroom apartment varies between 145 thousand and 180 thousand euros, and for three-bedroom apartments - between 210 thousand and 250 thousand euros. The terraced house costs between 250 thousand and 420 thousand euros, and the detached house - from 450 thousand euros upwards.

Rents for two-bedroom apartments in the medium and high segment vary between 950 and 1200 euros, and for three-bedroom apartments - between 1300 and 1600 euros. Rents for houses start from 2000 euros.

The difference between the offer and purchase price varies depending on whether the property is ready for use or under construction. The average discount is 3% in the first half of 2020.

The completed projects have registered a growth of 4%, which brings the total supply in the segment to just over 11 thousand residential units - apartments, terraced and detached houses, concentrated mainly in the southern districts and the foothills of Vitosha.

However, the supply of space in active construction projects decreased by 4% compared to the second half of 2019. Thus, they became a total of 3,800 housing units in the medium and high segments.

Vacant housing units continue to decline steadily and fall from 5% to 4% in the first half of 2020.

Colliers expects supply to shrink as some sellers may delay selling their properties until the health crisis is over.

It is possible that some of the projects with a planned start of construction in 2020 will postpone it until next year. This will in the short term lead to a drop in supply and keep prices at their current levels.

Buyers of properties under construction are likely to benefit from more flexible payment schemes. Entrepreneurs who fail to realize the planned sales volume before receiving Act 16 are expected to be willing to discount prices between 5% - 10%.