Impact of COVID-19 on the residential real estate market in Bulgaria

Covid-19 hits Bulgaria on March 13th

Author: Ana Petkova, Digital Marketing Director,

Bulgaria declared a state of emergency on March 13th that lasted two months. For the first quarter building permits for housing have decreased by 21.1% and home purchases have decreased by 6% year-on-year. The second quarter will inevitably perform even worse. 

Bulgarian people clearly remember 2008, many fear (and many hope) housing prices are about to drop in the same manner this time as well. 

Despite the emergency state, many international and local-level experts say that the consequences will not be as great or long-lasting as the previous financial crisis. International housing market studies show that most economic indicators sharply decline during health crises and then quickly bounce back after they end. monitors the property market in Bulgaria daily. Our AI-powered algorithm filters out fake and duplicate listings, collects information on prices, rents, time on the market and more. This is how we collect trustworthy and timely information about important changes on the real estate market in Bulgaria.

Here is how Covid-19 has impacted the Bulgarian real-estate sector up to this point.

60% fall in new unique listings in Sofia during the national emergency

We see the strongest indication of what is happening on the market in the huge decline in the supply of housing on the market.

New listings all but disappeared in first few weeks

The number of unique listings of apartments for sale decreased by 53% nationally after the announcement of quarantine measures in the country on March 13. With a nationwide lockdown home viewings and property evaluations became impossible. Despite the quick reaction and adaptation of real estate brokers, who introduced a wider use of 3D tours and online document signature, transactions during the period were almost non-existent.

The decline has been similar across Bulgarian metropolitan markets. The biggest drop in supply was measured in Sofia – 60%, followed by Stara Zagora – 58%. In Plovdiv, Varna and Burgas the number of listings dropped by half.

Rent listings also dropped but to a lesser extent. In the 6 major cities in Bulgaria, the supply of apartments for rent has fallen by 21% since the beginning of the Covid-19 crisis.

Stara Zagora was hit the hardest with a decline of 39% compared to the previous period. In Sofia the number of listings fell by 20%, in Plovdiv by 25%. Burgas was the only major city that saw a modest increase in rent listings – 4%.

The decline in supply has been in-line with what we see internationally.

Tenants and buyers are on hold

With the announcement of the quarantine, home tours were also stopped. 

Both tenants and buyers entered waiting mode. The reason for this is not only the difficult process of finding a new home, but also the cautiousness of buyers. They are not sure that they will keep their income and prefer to wait before purchasing. 

There was a significant increase of people being laid off in the six weeks of lockdown which has already slowed down and recovered. 

In the beginning of the crisis experts predicted that there would a “pause” on deals, and they will simply happen at a later date. Today it seems like this prediction has come true. 

On one hand, listing volume has almost recovered in May, as well as interest in buyers. On the other hand, purchase decisions are still lagging. 

Sale prices remain constant but we see a decline in rents

Sale prices remain relatively stable

Apartment prices in Bulgaria have fallen by 3% in the beginning of the emergency state. However, when looking at the first half of 2020 as a whole, apartment prices have remained stable in Sofia and Plovdiv, the two largest cities in the country.

About ⅓ of buyers, especially those who rely on mortgages to buy their home, have withdrawn from a purchase, according to real estate agencies. 

The buyers that remain active ask for serious price reductions – as much as 30% of asking price. However, sellers are in no hurry to lower prices at this point. They do not have an urgent need to sell and asking prices have suffered only a slight decrease.

The cities on the Bulgarian Black Sea coast saw bigger price reductions. In Burgas there was a decrease of 4%, while in Varna asking prices fell by almost 6% during the lockdown.

When it comes to home sale negotiations during the pandemic real estate agents quote different price reductions. Some say homes get sold for 5% of asking price, others go down as much as 15%. What they agree on is that quality homes with good location and “trophy” homes get sold with no reduction in price and in matter of days even during the lockdown.

Rental prices have dropped, affected by the coronavirus

Rents have seen a faster and sharper decline in prices compared to sales, as they are more liquid. According to our data in the first month of quarantine rents have declined by 9% nationwide. Rents have suffered the largest decline in Burgas by -6%, followed by Sofia -4%. In Plovdiv, rental prices have fallen by only 1%, and in Varna by half a percent.

Many landlords made special offers for the period of the lockdown. Asking prices got reduced by 15% during negotiations, according to some agencies. 

When it comes to the higher segment, not all landlords are ready to reduce prices. Many Bulgarians who’ve worked abroad have returned to the country and are looking for such homes. 

When comparing longer periods, our data shows that accommodation in Bulgaria is advertised at similar prices as before Covid-19. 

An interesting trend is the entry of Airbnb homes into the long-term rental market. These homes are usually more luxurious. Some Airbnb hosts in the capital are even selling their apartments due to the unpredictability of the tourist season. On the sea coast owners aren’t selling yet in hopes of a strong summer season. 

Mid-term impact depends on the economy in general

The mid-term impact depends on how the world economy handles the next few months. According to Eurostat forecasts, Bulgaria’s GDP in 2020 will decrease by 7.2% year-on-year.

The restaurant and hotel industry are two of the engines of the Bulgarian economy. As they were severely hit by the pandemic this will inevitably affect overall consumption. 

Bulgaria is a big importer and the country is taking advantage of lower prices of raw materials, according to Georgi Angelov, senior economist at the Open Society Institute. Energy prices have dropped dramatically and this is helping production. 

In general, most experts give the same forecast – if there is no strong secondary wave of the disease, the economy is likely to recover at a reasonable pace. 

Health and housing uncertainty

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. For the past 3 months the market has shifted from a seller’s market to a buyer’s market. 

With the removal of measures related to COVID-19, the real estate market in Bulgaria is expected to return to normal, and some even predict a boom in deferred transactions. Real estate agents remain optimistic and hopeful for a busy summer, but June has been marked by an even greater number of new cases and the threat of reestablishing restrictions. 

Prolonged quarantine measures risk permanent business closures and higher unemployment, which will have serious consequences for housing.

Banks are becoming more cautious 

Georgi Zamanov, CEO of Allianz Bank Bulgaria has expressed his relative optimism about the economic forecast. According to him unlike the 2008 crisis, the health crisis will first turn into a crisis of the real sector and only then into a crisis of the financial sector. The Bulgarian banking system is very liquid and well capitalized. The loan to deposit ratio currently is below 80% in Bulgaria, unlike 2008-2010 when it was about 110%.

A few banks have become more cautious in lending and issue smaller LTV loans in recent months. Allianz Bank for example has increased the minimum self-participation value for mortgage borrowers with 5% for all types of homes for Sofia and the countryside. Interest rates however remain low.

Buyers profile has changed

Active buyers haven’t only decreased in numbers, but their profile has changed significantly. 

Buyers now want to buy with cash. They live primarily in the countryside where they can afford to do so. In Sofia 36% of transactions during the emergency were financed by banks, according to Address real estate. Before the pandemic 60% of buyers in Sofia were using loans to finance their home purchase. 

Last year the biggest part of home-buyers were millennials, but this new trend has quickly reversed. Active buyers today are around 50 or older. They’ve seen their assets depreciated in previous recessions and are currently looking to invest in the perceived safety of brick and mortar.

Buyers also expect a higher-quality service from their agents. The National Real Estate Association gave an example with home valuations that need to become more precise making buyers feel safer during a transaction. is a property analytics company based in Bulgaria and founded in 2018. The company’s flagship product is the eponymous listings website, which provides sellers and buyers with vrious information to help them make better real estate choices – price data, market dynamics, neighbourhood demographics, crime rates, data on nearby schools etc. also offers a suite of analytics products aimed at banks. The company’s B2B offerings help banks utilize the power of data to make more informed decisions throughout the lifetime of a mortgage – from origination, through approval and subsequent collateral appraisals. Currently the company is in the process of expanding the coverage of its products to several markets within the EU.