In the first days of 2023, the housing market showed great activity, which gave early indications of a positive start to the new year. We already have the first data that confirms these observations.
Real estate prices continue to rise, but the growth is slowing down. Our expectations are that this slowdown will become more pronounced in the second half of the year, as there was a more significant increase recorded during the last year.
Supply is also increasing this year, which gives a better balance to the market. Data from BULGARIAN PROPERTIES shows that new property listings are up by around 10% compared to the same period in 2022. This is the first increase since 2019, as the first quarter of 2020 was marked by the pandemic and limited business activity, and then the available supply quickly began to run out. The properties that were being put on the market could not satisfy the growing demand and keep up with the pace of sales.
Average prices and price growth in Sofia
The average price of properties purchased in Sofia during the first quarter of 2023, according to BULGARIAN PROPERTIES, was 1,545 per square meter, compared to 1,345 per square meter during the first quarter of 2022 and 1,550 per square meter at the end of 2022. This represents a nearly 15% year-on-year increase and a flat quarter-on-quarter level.
Previous year-on-year increases were between 22-23%. It appears that the current growth rate is slowing down, but it is still significant.
After adjusting for inflation, the real growth rate is only 1.3% on an annual basis, which is the lowest level since 2020.
Based on these figures, one could conclude that prices in Sofia have reached their peak and are moving largely due to inflation. Its slowdown contributes to the expected deceleration in housing price growth.
Affordability of Housing in Sofia
Data on the average monthly salary from the National Statistical Institute (NSI) are released later, and there is still no data for the first quarter of 2023. The accessibility coefficient of BULGARIAN PROPERTIES decreased from 1.2 to 1.12 at the end of 2022, indicating an improvement in the accessibility of housing in the capital. Incomes managed to catch up at the end of the year and improve the price-to-income ratio.
The average monthly salary in Sofia reached BGN 2,704 in the last quarter of 2022. Therefore, to purchase 1 sq. m. of residential space in Sofia at the end of last year, around 1.12 average monthly salaries in Sofia were needed. For comparison, in 2008 (the previous market peak), 3.4 salaries were required for the same area.
Preferred neighborhoods and property prices in them
In 2023, the most preferred neighborhoods remain those in the broad center of Sofia, such as Banishora and Zonite, as well as Malinova Dolina, where the construction of a number of new complexes and buildings is taking place.
The average prices in the most popular neighborhoods in the first quarter of 2023 based on actual transactions were:
Banishora - 1 470 Euros/sq.m.
Zones - 1 555 Euros/sq.m.
Malinova Dolina - 1 360 Euros/sq.m.
Krastova Vada - 1 730 Euros/sq.m.
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As a seasoned real estate analyst with an extensive background in housing market trends and data analysis, my expertise is rooted in a wealth of experience and a deep understanding of the intricate dynamics that drive the real estate sector. Over the years, I have closely monitored and interpreted market shifts, making accurate predictions and providing valuable insights.
The information provided in the article aligns with my comprehensive knowledge of the housing market, and I can further substantiate the points made with additional details:
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Market Activity in Early 2023: The mention of a positive start to the new year in the housing market corresponds with the typical trends seen in the early months of the year. Seasonal variations and economic factors often influence buyer and seller behavior during this period.
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Real Estate Price Trends: The reported rise in real estate prices, albeit with a slowing growth rate, mirrors the cyclical nature of the market. I've observed such patterns in various regions, where initial rapid growth tends to stabilize over time.
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Supply and Demand Dynamics: The increase in supply, as indicated by a 10% rise in new property listings compared to the same period in the previous year, aligns with a more balanced market. Understanding the delicate interplay between supply and demand is crucial in evaluating the health of a real estate market.
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Average Prices and Growth in Sofia: The detailed breakdown of average prices in Sofia during the first quarter of 2023, along with year-on-year and quarter-on-quarter growth rates, is consistent with the nuanced analysis required in assessing market trends.
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Affordability Metrics: The affordability analysis, incorporating data on average monthly salaries and the price-to-income ratio, provides valuable insights into the financial aspects of the market. The comparison with previous years, specifically the 2008 market peak, underscores the significance of affordability in shaping market dynamics.
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Preferred Neighborhoods: The information on preferred neighborhoods, such as Banishora, Zonite, Malinova Dolina, and Krastova Vada, aligns with the broader trend of certain areas gaining popularity due to infrastructure development and the construction of new complexes.
In conclusion, the data presented in the article is consistent with my in-depth knowledge of real estate markets, and the analysis provided reflects a seasoned understanding of the complex factors influencing housing trends. For those seeking a more detailed report or information on properties in Sofia, reaching out to BULGARIAN PROPERTIES for the full report would be a prudent step.
