Buyers vanish

First, banks stopped lending to developers. Then, they tightened lending to buyers. Now, it seems like buyers don’t want a credit which aside from being difficult to obtain, is quite expensive. It gets harder to persuade them to buy something when they believe they will buy it cheaper later on. So, the first question they ask is about discounts.

Indeed, looking at asking prices, one can hardly believe that properties get cheaper. There are still people buying old builds, especially brick premises that are still out of touch with modern trends. Frequently, flats located in Sofia’s residential districts of Ivan Vazov, Iztok, the city center or Lozenets, go beyond EUR 2,000 per sq m. In the central regions of Burgas and Plovdiv they exceed EUR 1,200.

As vendors seldom make discounts on property prices, the decline is mostly manifested in the number of transactions. Data for H2 of 2008 taken from the Sofia-based Registry Agency shows a decline of between 10 and 20% in registered sales (residential properties predominating). Only in Burgas transaction volumes have increased (where prices are rising according to the National Statistical Institute).

Panel prefabs are definitely going down. They drop down to EUR 500-600 per sq m in big suburban districts. In Sofia, a 98-sq m residence in the residential district of Nadezhda near Billa hypermarket costs EUR 58,900. In Plovdiv, the cheapest residence in the Karshiyaka district is priced EUR 580 per sq m while units on the outskirts of the city go even below EUR 500.

Vendors will have to find a new route to the hearts of buyers, if they want to retain their businesses. They claim there are two ways of doing this - to adhere strictly to the quality of inhabitants (there are either no investors or they want to buy cheap properties) or to build a bridge over the gap between buyers and banks. Payments schemes and finishing touches are the new factors defining transactions.

You don’t have the money? Then we will give you some. This is how developers can win the battle with old builds, which are still cheaper. It will be more difficult, however, to gain back the trust of buyers and show them their investment is worthy.