PROPERTY IN BULGARIA

Is there a methodology measuring property prices and changes in them?

Everyone knows that the price of a particular property results from the agreement between the seller and the buyer. When the two parties agree on a price, which the buyer is willing to pay and the seller is willing to accept against transferring the legal title in the property, then the transaction can be successful. However, it is essential for real estate companies to have such data for current prices and trends. Here are the public sources of information on property prices in Bulgaria: The REMI Index is calculated by the National Association of Real Estate Companies in Bulgaria. It has a few drawbacks, though, because: It is calculated quarterly. It is too general and does not compare real estate prices by type or location. Members of the Association are not obliged to provide information, so this Index does not reflect the real situation. It is not completely trustworthy for there is no established procedure to check reliability of data provided by the members. Nevertheless, it is a good initiative helping in orientating in property pricing and price changes.

Real estate Internet portals can also be used as pricing indicators and, perhaps, they give information, which is most easily accessible and very close to the market information. The major problem with quoted prices is the fact that they are not about concluded deals, but about demand and supply price offers.

National Institute of Statistics publish lists with prices, which differ considerably from market prices, so analysts or agencies are not likely to use them.

Real estate agencies have the latest updates on prices, but this information is a well-kept secret inside the company as the competition is very tough, and, unfortunately, it is not available to the public.

Who are the main users of such information and to what extent can they rely on it in reaching a real market price?

Firstly, they are the buyers and sellers, who are willing to close a transaction and the availability of reliable information can help them avoid any property speculation. Secondly, banks, insurance companies and other organizations are also regular users. They employ or hire licensed property valuers to determine the real market price of properties. The valuers most often keep a record of offers for sale and, with the time, they build a database including information for closed deals. However, the scope of information is limited and it is only for use inside the financial institution. Licensed property valuers apply different methods to determine the market price of a certain property. They also use the information supplied by the estate agencies against payment. Thirdly, analysts and journalists, watching the property market, also count on reliable and trustworthy information in their attempts to foresee trends. Last, but not least, investors largely rely on these data, so that they can estimate the future effects from their investments. Foreign investors tend to be more and more interested in the real estate market, and one of the easiest ways to encourage them is to provide them with information charts for prices of immovable properties in Bulgaria.

Then why is there not a price index to meet the huge demand?

One of the main reasons is the lack of trust between the estate agencies, as they believe that smaller and disloyal companies might abuse with the shared information. Another reason lies in the current situation on the market where sellers ‘dictate” to the buyer. Buyers expect a continuous rise in prices and are convinced that any price paid now, will be lower than future prices. In such conditions, most buyers tend to pay the demanded price without having any real basis to compare. Therefore, mainly brokers and builders can benefit from the lack of such a price index. However, it does not follow that they hinder the start of the index, although they are the main information providers and, unless they come to an agreement on what conditions they would share it, it is unlikely to happen. Besides, there are no serious indications from the community that it is willing to have such an index (regular and detailed), which also adds to the speculative nature of the market at this moment. Keeping in mind that this market involves very many different entities and considerable investments, and the threat of the balloon going up has been around for quite a while, we should invent a warning mechanism for negative developments. Time is ripe for the most active real estate market participants to unite and make the index. A methodology should be prepared to guarantee reliable information at regular intervals. The security of information providers should be crucial too, and data receiving and data collecting could be done reciprocally. A certain fee could be paid to use the data, and the administrator of the index could provide regular paid analyses at different levels of access. There are numerous variants to choose from and the decisions to be made depend on the good will and constructive co-operation of most, if not all participants. Should you be interested in property prices in a particular region in Bulgaria, do not hesitate to contact our company, for our specialists will gladly help you find out about the current situation on the real estate market in the place you have chosen. For more information, please e-mail us at info@bestbulgarianproperties.co.uk