Initial data on COVID-19 impact on Bulgarian Real Estate
market | Georgi Demirev, Founder ocenime.bg
Summary on the live webinar organized and sponsored by PropTech Bulgaria
To forecast what we can anticipate to possibly happen here in Bulgaria, we review the status of a number of countries worldwide, these being, China, the UK, the USA.
► A presentation of Georgi Demirev, Co-Founder, ocenime.bg
China’s national Bureau Statistics
More interesting is what happened after the lockdown was listed and how the market recovered and did it recover? We see that already in April when the first load in China was being listed for example in Shanghai, the market already started to rise out. Year-on-year sales were down by 70% in March compared to March in 2019 enabling these numbers to be only 40% (Barclays) decrease in sales compared to volume in sales in April 2019.
A study of 25 real estate companies in China reports doubling their sales in April compared to February and March. Some even report year-on-year growth (Shidai Caijing). So there are reasons for optimism in the local market.
What happened with prices?
It’s hard to say how much exactly they sell on a monthly base, but as it seems, they have managed to recover some of their growth on a yearly basis. So, on average across China we see 5.2% sale prices increase in April, based on China’s National Bureau Statistics.
63 out of 70 biggest cities in China experience growth rates as compared to April 2019.
Data by Hometrack and Zoopla
There have been no real estate transactions and home relocations for 15 days due to government restrictions (between 23 March and 13 May). So 15% of the year basically was shut down for the property market.
So how is this changing the market re-open?
We see the biggest decline in the first few weeks of the pandemic when there were a lot of fear and basically nobody was browsing during the lockdown. Since then the browsing has been slowly recovering and steadily rising, followed by a demand recovery.
41% of home seekers had put their search on halt. Two thirds of the remaining 59% said that the pandemic had affected their criteria for choosing a new home.
So what about the sales transactions?
They were almost at a zero rate, but now we see, as lockdown measures has been slowly dismissed, sales rise quickly. However, they are still – 80% below the normal level as of 20th of May. We will see in the next couple of weeks how quickly this indicator will recover.
Price growth slows down to 1.9% compared to last year.
Data by Ziilow (NASDAQ: Z)
We see a huge fall in transactions in percentage calculation. However, this is less than in China.
– 44% fall in sales volume from February to April.
And we see that the market will stick in again. All measures show that the worst market slowdown is already behind.
Prices already begun to show a downward trend and it’s expected that they will fall to -1.8%, as compared to the pre-COVID period.
Data by ocenime.bg
Similar to the other countries we had looked at, we see a big decrease in new unique listings: over a 60% drop in Sofia which is valid also for the other parts of the country, especially during the first few weeks of the pandemic.
Rent listings also decreased but not so much.
Sale prices remain constant but we see a decline in rents.
So what to expect in mid-term for Bulgaria?
The initial COVID-19 shock seems to have cooled down the real estate market a bit but without seriously affecting prices. Supply and demand are also recovering quickly.
Banks are being cautious in lending and issue smaller LTV loans in recent months. Interest rates however remain low.
The mid-term impact depends on how the world economy handles the next few months, as Bulgaria depends heavily on export and tourism. What is going to happen in the property market next depends on the overall market economy.
Real Estate investment in a post-Covid environment | Eftim Eftimov, Founder Property Club Bulgaria
Do you see any dramatic changes in the behaviour of investors in real estate as a result of COVID-19?
We don’t see any dramatic changes. Obviously, people are more cautious. But investing in real estate can take different forms. You can invest in actual property for example and brick-and-mortar in the long term or you can go to the US stock exchange and find the company that pretty much has certain real estate exposure. It is a tricky market right now to do something speculative.
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