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House Hunting in Bulgaria

Alison Gregor - New York Times 27 August 2014

Alison Gregor – New York Times 27 August 2014
After a long housing-market slump triggered by the global real estate crisis, when prices dropped on average about 30 percent below their 2008 highs, Bulgaria is seeing housing prices rise this year for the first time, brokers said.

Data from Bulgaria’s National Statistical Institute show an increase of 1.79 percent in home prices during the first quarter of 2014 over the previous year; the second quarter had an increase of 2 percent, said Polina Stoykova, the chief operations manager of Bulgarian Properties, based in Sofia with offices worldwide. The biggest cities in the country, such as the capital, Sofia, and Plovdiv, have seen the biggest increases in home prices, she said.

About 10 percent of the Bulgarian housing market is made up of foreign buyers, said Stanislav Petrov, the sales manager for Select Properties Bulgaria, an agency with offices in Bulgaria and Great Britain. Foreign buyers, most of whom are seeking vacation apartments or houses, tend to be attracted to the Black Sea coast, in particular the cities of Varna and Burgas, followed by ski resorts, such as Pamporovo and Borovets.

“The capital, Sofia, is the third preferred region or area for foreign buyers,” Mr. Petrov said, “with higher-priced properties than the Black Sea coast and the skiing resorts.” The average price of homes in Sofia in the second quarter of 2014 was €753, or about $992, per square metre, Ms. Stoykova said.

In Varna, the average price is €699 per square metre, she said. (Though Bulgaria still has its own currency, many real estate listings and transactions are in euros now.) Among foreign homebuyers, “there is a search for first-line beach houses, which, due to the building restrictions in Bulgaria and the rarity of that beach topography, makes their prices high,” Ms. Georgieva said.

British buyers, who helped fuel the home price bubble in Bulgaria from 2000 to 2008. However, this year, British buyers have been returning to the Bulgarian market in growing numbers, Ms. Stoykova said.

Russians continue to be the largest group of foreign homebuyers in Bulgaria, and are joined by buyers from Germany, France, Holland, Belgium, Scandinavia, the United States, Canada, Australia and South Africa. In the last two years, Bulgaria has also seen growing interest from buyers from the Middle East and China.

Foreigners are not restricted when buying apartments in Bulgaria. The process is fairly fast, easy and cheap. Agencies usually include legal assistance and buyers typically pay about 3 percent commission. Notary fees, stamp duty and municipal local tax typically cost about 4 to 6 percent of the property price.

In total, additional costs are about 8 to 9 percent of the price of the property, she said. Many home sellers in Bulgaria offer buyers the opportunity to pay in installments, and mortgages are available.