Activity in Bulgaria's real estate market is beginning to decline. The number of property sales totalled almost 49 thousand in the first three months of 2022, which was up 10.8% compared to the same period in 2021. In the second quarter, they were 48.8 thousand, but the rate of increase was only 4.31% compared to April - June 2021. For the half-year, the number of transactions was slightly over 112.5 thousand, according to the Registry Agency. The increase compared to the first half of 2021 is nearly 7% or 7,401 deals. The data covers deals in buildings, ideal parts of buildings and land registered in all 113 registry offices throughout the country.
Freeze in Sofia
In Sofia, the number of sales of real estate practically stopped going up in April-June 2022 - the increase compared to the second quarter of 2021 is 0.28%. For the first six months, the rise in the number of deals in the city is 3.5% year-on-year and is below the average for the country.
Other big cities like Varna and Burgas also feel the slowing down of the market compared to the first quarter of the year. Back then they recorded an increase of 34.6% and 18% year-on-year, respectively. Now the growth in both cities compared to 2021's second quarter is 10.5%.
Among the four biggest cities, only Plovdiv sees a slight increase - while the transactions in the first quarter of 2022 were 3% less compared with the same period in 2021, now it reports an annual increase of 3.82% for the second quarter. For the half year, the transactions are only 0.90% more compared to the first six months of 2021.
Veliko Tarnovo, Stara Zagora and Ruse report a decline in the range of 3 to 5%, and Stara Zagora - posts a drop of 8.96%. In the tenth largest city in Bulgaria - Shumen, the decrease in the number of transactions in the second quarter is 13.07%.
Sliven, the eighth largest city in the country, slows down slightly - from 2.95% in the first quarter, the rate of increase dips to 2.21% in the second, year-on-year. In Dobrich, the slowdown is from 11.53% in the first quarter to 4.62% in the second.
It is still hot at the seaside
The activity along the Black Sea coast is also slowing down in the second quarter of 2022 compared to the first one. The year-on-year rise in the number of transactions in the Registry Agency's offices located in Balchik, Burgas, Varna, Kavarna, Nessebar, Pomorie and Tsarevo is more than 30% for the half year, which is significantly higher than the average increase of 7% for the country and 5.3% for the ten big cities.
Varna is the coastal city with the most deals - they are 4328 for the second quarter and a total of 7799 for the first six months of 2022. Compared to the same period of the previous year, the increase in the number of deals is 20.12%. The city holds its third position after Sofia and Plovdiv in the number of transactions.
In Nessebar, Balchik and Burgas, the rise in the second quarter is weaker in annual terms compared to the first quarter. The increase in the number of deals in Nessebar for the first quarter of 2022 is 104.6% year-on-year, while in the second quarter it is 87.58%. For the half year, the increase is 92.87%. This makes Nesseber a record holder - there is no other city in the country with such growth rate. Tsarevo grabs the second position with 36.90% rise in the number of transactions for the half year.
For the first time (at least in the last four years), Nessebar entered the top 10 in the first quarter this year, ranking fifth, just after Burgas. For the second quarter of 2022, Nessebar even came ahead of Burgas, ranking fourth with 2,915 deals. For the half year, the picturesque town reports 4,353 transactions compared to 3,938 in Burgas.
Kavarna is the only seaside town that reports a decrease in transactions in the second quarter compared to the same period of 2021 (-10.5%), while in the first quarter it reported growth of almost 2%. The annual drop in the number of transactions in the half year was 5.6%.
Activity shifts to the periphery
However, a quarter of registry offices report greater growth in April-June compared to the first quarter. Among them are locations near Sofia such as Elin Pelin, Ihtiman, Slivnitsa, and winter resorts like Smolyan and Chepelare. Activity in the real estate market is reported in Northeastern Bulgaria - in Targovishte, Razgrad, Veliki Preslav, Provadia, and Silistra, as well as in places in the periphery of the country - Kozloduy, Oryahovo, Byala Slatina, Madan, Momchilgrad, Gotse Delchev. It seems that the wave of increased real estate activity has reached them later and will probably recede in some time.
The slowdown in the market is happening in conditions of war in Ukraine and a jump in the prices of construction materials, high inflation, and last but not least, an expected rise in mortgage lending rates. Many owners refrain from selling because of the risk of inflation melting away their income. Construction contractors are also in a wait-and-see-mode because they find it difficult to estimate the final cost of future homes. Some people want to buy property to protect their savings, but others prefer not to hurry because they expect a drop in prices. At this point, it is difficult to say whether the slowdown in activity on the Bulgarian real estate market will be temporary or the second quarter of 2022 marks the beginning of a lasting trend.