Three scenarios for the property market in Bulgaria along the eurozone

Borislav Gostev, General Director of Super Credit, participating in the show "ImoTiTe" on Bloomberg TV.

The European Commission and the European Central Bank published the convergence reports, in which the main conclusion is that Bulgaria meets the criteria for joining the eurozone.   The country is expected to become part of the monetary union from January 1, 2026. This decision has raised a number of questions regarding its impact on housing lending and the real estate market in our country.

Currently, three possible scenarios for market development can be distinguished - optimistic, realistic, and pessimistic.   The most likely scenario is the base case, which is slightly optimistic. It foresees moderate growth in housing lending, combined with an accelerated rise in property prices this year and a gradual calming of the market next year, explained Borislav Gostev, CEO of   Super Credit , on the show "ImoTiTe" with host Hristo Nikolov.

In the realistic scenario, a slight increase in both the number of housing loans and their average size is expected in the coming months and next year.   In addition, forecasts point to a more significant increase in property prices by the end of this year, followed by stabilization next year, Gostev pointed out.

He specified that "calming" means limiting the annual growth in prices to no more than 15%, and next year an increase within 5-7% . As for interest rates on loans, they are expected to remain at current levels.

Gostev also commented on the optimistic scenario, which includes a significant increase in foreign direct investment – not only in the real estate sector, but also in the entire economy. According to him, despite the positive effects for the country, this scenario may turn out to be negative for the average Bulgarian, as it will lead to more serious pressure on housing prices and make access to them more difficult.

The pessimistic scenario is more related to geopolitical instability - the ongoing war in Ukraine and the unpredictable customs policy of President Donald Trump. These factors could neutralize the positives of joining the eurozone and lead to global uncertainty, which would negatively affect both the economy and the property market and credit activity.

In conclusion, Borislav Gostev stated that the most likely scenario remains the slightly optimistic scenario with moderate growth in lending and real estate prices.   He expressed hope that the economy will develop positively and the necessary reforms will be implemented to make properties more accessible to the general public.

Regarding the observed trend in which housing prices are outpacing incomes, host Hristo Nikolov pointed out that there is a danger that this could become a problem. He recalled the measures of the Bulgarian National Bank from October last year, which limited loans with a maximum term of 30 years - affecting about 2-3% of the market. Previously, banks financed up to 90-95% of the property value, and now the limit is 85%.

As a result, banks are changing their policy, targeting better customers and offering products based on the future market value of the property.   Gostev explained that in practice the costs of the purchase are quite high – in addition to 3% local tax and 1% notary fees, renovations in Sofia for a two-bedroom apartment range between 80 and 100 thousand leva, and for a three-bedroom apartment they can reach 180-250 thousand leva. This means that buyers must actually have about 40-50% down payment to close a deal.

Currently, interest rates in Bulgaria are among the lowest in Europe - the country ranks third after Switzerland, Gostev explained.   He predicts that with the entry into the eurozone, banks will follow a more pragmatic pricing policy, which will be based on market indices. The European Central Bank is already actively reducing interest rates, and according to expectations, they will fall by another 0.25 points.

In conclusion, he pointed out that membership in the eurozone would ensure low interest rates for both businesses and borrowers.

Watch Borislav Gostev's entire performance here:

Borislav Gostev participating in the show "ImoTiTe" on Bloomberg TV.

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