Prices are plummeting

Residential prices are falling indeed. Whether by 20% or just 2% it probably doesn’t matter considering the fact this is the first reversal in years.
Asking price levels have stabilized long ago and prices of say € 1,000 per sq m for panel flats in Sofia can only be found in neighborhoods like Lozenetz or Iztok. Last month, a 90-sq m three-room apartment located somewhere between the Traffic Police premises and Tsarigradsko Shose Blvd. was traded for over € 79,000. Such an expensive price could hardly buy a new, two-room residence in the neighboring area of Dianabad in the beginning of 2008.

In the city of Burgas, the lowest prices for the most commonly purchased homes that date back to communist times, have gone down to €550 per sq m (this is the price of a three-room flat in Slaveikov neighborhood) and € 520 per sq m in farther located Meden Rudnik. Price levels in the city of Varna are still stable, in particular those in the residential districts of Mladost, Troshevo and Levksi where properties used to be traded for € 800 the least.
The latest data of the National Statistical Institute may lead some vendors into reducing their asking prices. In Q4, 2008, after banks tightened their lending especially for panel flats, prices for existing residences in Varna have declined by 1.3%, in Sofia -3.9% and 2.1% in the city of Plovdiv. It is only Burgas that held its head up high above the water. The National Statistical Institute examines average asking prices for old, brick and panel flats.

However, leading real estate agencies that are marketing thousands of new residential blocks of flats, are afraid that prices will plummet by 20% as we now have only cash-rich buyers who look for the best offers. Sales volumes have fallen by 40%, some real estate agents point out. It seems that the number of homes to be sold will rapidly increase and developers will have to find new stimuli to talk buyers into buying their properties instead of old builds or the units of their competitors.