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Everything you need to know is included in our Bulgaria Property Pack
Are you thinking of investing in property in the land of Roses? Are you curious if the prices are at an optimal point?
People hold diverse opinions regarding market timing. The Bulgarian real estate agent you know may suggest that it's currently a good time to buy property, but your childhood friend living in Sofia suggests waiting for a couple more months.
At Investropa, when we create articles or update our pack of documents related to the real estate market in Bulgaria, we facts and data that are backed by evidence, not just opinions or rumors.
We have carefully studied official reports and statistics from government websites, and we now have a trustworthy database with important information. Here's what we discovered, which can help you decide if it's a good idea to purchase real estate in Bulgaria.
Happy reading time!
How is the property market in Bulgaria now?
Bulgaria is widely recognized, today, as a stable country
Positive
Stability is a necessary condition when investing in real estate because it promotes steady rental income and potential capital gains. It is an information you need as a foreigner buying a property in Bulgaria.
Yes, Bulgaria is a country with a stable environment. The last Fragile State Index reported for this country is 51.6, which is a highly satisfactory number.
Bulgaria is widely recognized as a stable country due to its consistent economic growth and reliable political system, which have both been in place for the past several years. Additionally, Bulgaria has a strong commitment to upholding the rule of law and protecting the rights of its citizens.
Investing in this country rests on solid ground. Next, let's analyze the economic forecast.
Bulgaria will keep growing in the next 5 years
Positive
To figure out if it's the right time to buy a property, start by checking how well the country's economy is doing.
In line with IMF predictions, Bulgaria will end 2023 with a growth rate of 1.4%, which is encouraging. As for 2024, the experts say 3.5%.
The pace will even accelerate since Bulgaria's economy is expected to increase by 12% during the next 5 years, resulting in an average GDP growth rate of 2.4%.
The expected sustainable growth rate in Bulgaria is a positive sign for real estate investors, as it indicates that the country's economy is on a healthy track and that property values are likely to increase over time. This provides investors with the assurance that their investments will be secure and profitable.
That being said, there are other indicators to monitor.
Bulgarian business owners are even more confident now
Positive
The GDP growth is auseful measure, but may not encompass business community sentiments on property market. Fortunately, in Bulgaria there is an official metric that is consistently updated. We're lucky because this isn't true for every country.
The Business Consumer Index (BCI) is a metric that reflects the confidence of business leaders in both the current and future economic conditions. It is established through surveys and assessments.
According to the National Statistical Institute's data, the latest Business Confidence Index value is 26 for Bulgaria. It's truly excellent.
If we analyze the data from a closer perspective, we can identify an encouraging signal: the score has turned positive. Twelve months ago, it had fallen to 18.
When local businesses in Bulgaria are confident about the future, it's good news for property investors. It means that the economy is expected to grow, leading to more jobs and higher incomes. As a result, there would be a greater demand for properties, making it a great time for investors to earn rental income and potentially see the value of their properties increase over time.
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Bulgaria is delivering a lot more building permits
Positive
If you're contemplating buying property in a country, it's worth considering the number of building permits that have been issued recently. When more building permits are issued, it indicates an optimistic outlook for the property market's performance.
We have excellent news for you: the number of building permits delivered is exploding in Bulgaria.
In the past 12 months, according to National Statistical Institute, Bulgaria, the number of building permits issued by the Bulgarian municipalities rose by 40.7%, from 7,047 to 9,917 units.
The data here strongly suggests that many people think it's a good time to invest in real estate.
Another important point to note is that there will be an increase in the number of real estate available in the market. Based on this information, it's possible that property prices will decrease in Bulgaria in 2024.
Bulgaria's property prices continue to experience accelerated growth
Positive
Bulgaria's home prices have increased by 46.5% in 5 years according to eurostat.
It means that if you had bought a villa in Sofia for $500,000 five years ago, then it would now be worth around $733,000.
Currently, property prices are relentlessly surging, displaying a sustained period of accelerated growth in the real estate market.
It's definitely a positive signal for whoever wants to invest in the Bulgarian property market. However, you might want to wait for the next market correction.
You can find a more detailed analysis of the real estate prices in our property pack for Bulgaria.
Everything you need to know is included in our Bulgaria Property Pack
Bulgaria's population is getting a lot richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Bulgaria, the average GDP per capita has changed by 20.8% over the last 5 years. Almost no country has done better.
This means that, if you purchase a cozy cabin in the Bulgarian mountains and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, the rental demand might increase in Bulgarian cities like Sofia, Plovdiv, or Varna in 2024.
No high rental yields in Bulgaria
Neutral
Rental yield is a straightforward tool to evaluate the performance of real estate investments.
It represents the annual rental income generated by a property divided by its purchase price or market value. For instance, if a property in Bulgaria is purchased for 300,000 BGN and generates 18,000 BGN in annual rental income, the rental yield would be 6%.
Based on the data provided by Numbeo, rental properties in Bulgaria promise gross rental yields from 3.2% and 5.9%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Bulgaria.
It indicates a moderate level of income generation.
Also, as we have seen before, there might be a fall in housing prices (because of more available properties) and potential tenants are getting wealthier. Consequently, gross rental yields are very very likely to soar in Bulgaria in 2024.
Everything you need to know is included in our Bulgaria Property Pack
In Bulgaria, expect moderate inflationary effect
Neutral
Simply put, inflation is the gradual rise in the cost of goods and services.
It's when your usual bottle of Bulgarian wine costs 25 Bulgarian leva instead of 20 Bulgarian leva a couple of years ago.
If you're considering investing in a property, high inflation can offer you several advantages:
- Property values have a tendency to increase over time, leading to potential capital appreciation.
- Inflation can result in higher rental rates, thereby increasing the cash flow from the property.
- Inflation reduces the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, effectively preserving the value of the investment.
- Diversifying your portfolio with real estate provides stability during periods of inflation.
- Tax advantages, such as depreciation deductions, can help offset the impact of inflation.
According to the IMF's estimations, over the next 5 years, Bulgaria will have an inflation rate of 10.6%, which gives us an average yearly increase of 2.1%.
It means that Bulgaria could face inflation in the near future, which would lead to an increase in prices. Consequently, purchasing a property could become more expensive. However, if you buy now, there is a chance that your investment will appreciate, allowing you to sell it at a higher value in the future.
Is it a good time to buy real estate in Bulgaria then?
Time to conclude !
Without a doubt, 2024 offers a highly advantageous opportunity for property investment in Bulgaria, supported by a multitude of strong indicators. The country's established stability significantly contributes to its investment appeal, fostering a secure environment for property ownership. With a projected sustained growth over the next five years, Bulgaria's economic landscape further bolsters its attractiveness as an investment destination.
The increased confidence among Bulgarian business owners amplifies the positive outlook for property acquisition. Their optimism reflects a favorable market sentiment, enhancing the overall investment environment. The rise in building permits signifies a growing real estate sector, indicating potential for increased property values and investment opportunities.
The accelerated growth of property prices in Bulgaria solidifies its appeal for prospective buyers. This trend hints at the potential for substantial returns on investment, making the current market an opportune moment for those looking to capitalize on property appreciation. Additionally, the population's increasing affluence enhances demand and provides a supportive backdrop for property ownership.
While rental yields may not be high, this neutral aspect should be weighed against the broader positive landscape. Similarly, the expectation of moderate inflationary effects is a manageable consideration within a stable economic context. In conclusion, 2024 stands as an unequivocally favorable time to invest in Bulgarian property, fueled by its stability, projected growth, confident business outlook, burgeoning real estate sector, soaring property prices, and the improving financial status of its population.
We genuinely hope this article was useful!. If you need to know more, you can check our our pack of documents related to the real estate market in Bulgaria.
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This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
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