Real Estate in Bulgaria: Housing Overvalued by 10-15%

Photo: m.netinfo.bg

Housing prices in Bulgaria continue to surge, and according to estimates by the European Commission, they exceed their real value by 10–15% in 2025. This conclusion was reached in a recent report on the country’s macroeconomic situation. In the third quarter of 2024 alone, prices grew by 16.5% year-on-year, and compared to 2015, they have soared by 87%.

In 2024, alongside rising prices, there was a sharp increase in mortgage lending—the volume of new housing loans grew by 43%, following a 20% increase in 2023. A key driver remains the extremely low interest rates, supported by ample bank liquidity. Meanwhile, deposit interest rates remain close to zero, unlike in most other EU countries, where rates have risen.

The rapid growth has not led to fundamental changes. The mortgage penetration rate remains very low—only 1.8% of the population, with the loan volume accounting for 10.8% of GDP. This makes the market vulnerable to overheating, especially given the weak protection for low-income borrowers.

In 2024, the Bulgarian National Bank introduced new lending restrictions, mainly targeting high-risk borrowers. However, the European Systemic Risk Board believes these measures are insufficient. In February 2024, it characterized Bulgaria’s housing market as exposed to a medium level of risk, while calling the current macroprudential toolkit only partially adequate.

Affordability has formally improved, driven by rising incomes. Over recent years, average wages in Bulgaria have grown significantly faster than the price per square meter. The price-to-income ratio has fallen to about 60% of its long-term average, and housing provision per capita has increased by nearly 20% since 2015, reaching the highest level in the EU. Nevertheless, regional inequality persists: in rural areas and poorer communities, access to quality housing remains limited. Many homes there are outdated, poorly heated, and do not meet modern standards.

According to Bulgaria’s National Statistical Institute, in the first quarter of 2025, housing rose in price by an average of 15.1% compared to the same period in 2024. The most significant increase was recorded in the secondary market at +16.2%, while new construction rose by 13.4%. Among major cities, the highest growth was seen in Ruse (+25.4%), followed by Varna (+18.4%) and Plovdiv (+17.9%). In Sofia, property prices rose by 14.1%.

Compared to the fourth quarter of 2024, the average price increased by 4.2%; the secondary market grew by 6.1%, while new construction rose by only 1.3%. According to the National Real Estate Association, the price gap between the capital and the regions is widening, while the market remains active amid high demand.

The InvestRopa portal reports that in Sofia, the price per square meter ranges from €1,980 to €2,225, with annual growth reaching 16%. In Varna, the figure is €1,550–1,676; in Plovdiv, €1,150–1,328; and in Burgas, €1,200–1,300. In tourist areas, including Bansko, growth also exceeds 8–10%.

Eurostat highlights that Bulgaria ranks among the top three countries in terms of growth (+15.1%). Only Portugal (+16.3%) recorded higher figures, while Croatia came third (+13.1%). Overall, the housing price index (HPI) in the European Union rose by 5.7% year-on-year, and in the eurozone by 5.4%. This exceeds the figures for the fourth quarter of 2024, when growth was 4.9% and 4.1%, respectively.

According to analysts, increased housing demand in Bulgaria may be linked to rising household incomes, anticipation of euro adoption, and low financial literacy. Buyers do not always assess long-term risks, particularly amid near-zero deposit interest rates and cheap mortgages. This creates additional pressure on the market and raises risks for households with limited resources.

Experts expect that in the coming months, growth will persist but become more moderate. The strongest demand is likely to be for energy-efficient apartments in tourist and coastal locations, as well as for properties with resale potential.

See also:[b][/b]

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