What will happen to housing prices when the euro is introduced?

The residential property market in Bulgaria is the subject of in-depth expert analysis, as recent years have been characterized by accelerated price growth, a record number of transactions and high activity in the mortgage sector. Although the data point to stability, it is often the result of expectations and dominant narratives, and not necessarily objective economic grounds.

Joining the eurozone introduces a new institutional framework, but the impact on prices is expected to be rather indirect – through easier access to credit and changes in the behavior of the banking sector.

According to expert assessments, the market is approaching its peak, and the upcoming challenges will be related to changes in consumer attitudes, the dynamics of lending, and the need for a balance between supply and demand.

Borislav Gostev, general director of   Super Credit

2025 is set to be a peak year for the property market, with price increases of 15–18% forecast, supported by pent-up demand and limited supply. After 2026, a normalization and transition to more moderate single-digit annual growth of 6–10% is expected, in line with rising incomes and the possible implementation of new macroprudential measures by the BNB in response to activity in the mortgage sector. Examples from Latvia and Lithuania show that house prices can increase even with low inflation, while Croatia reports double-digit growth despite high interest rates. These examples confirm that long-term price dynamics depend mainly on incomes, the economic environment and supply, and not on the introduction of a new currency itself.

The currency change will be primarily a technical process, as currently about 95% of mortgage loans are in levs and will be automatically converted at the fixed rate of 1.95583. For 2026, the expectations in the banking sector in our country are to maintain the current reference interest rates, which are tied to the domestic deposit base. Gradually, some of the loans will probably start to orient themselves towards European benchmark indices such as EURIBOR and €STR, which will lead to a gradual alignment of interest margins with those in the euro area. Interest rates on housing loans in Bulgaria continue to be among the lowest in the EU, currently ranging between 2.19% and 2.80%.

Examples from the last three countries to join the eurozone – Croatia, Lithuania and Latvia – clearly show that the introduction of the euro did not lead to a sharp increase in property prices. Data from Eurostat and the European Central Bank point to a one-off and limited effect, concentrated mainly in the first month after the currency changeover. For the rest of the first year, price movements and the number of transactions were mainly influenced by more substantial factors such as incomes, interest rates and supply volumes. The eurozone may have a short-term administrative and psychological impact on the timing of transactions, but not on price stability. The market is expected to accept the transition calmly, without significant structural shocks.

The main driver of the property market will remain Bulgarian households, whose purchasing power is supported by growing incomes and relatively low interest rates. The most active will continue to be buyers with higher incomes, among whom a significant part are civil servants with already increased salaries. Investors who buy to rent will continue to show interest in Sofia, Varna, Plovdiv, Burgas and in the resort areas. Bulgarians living abroad, together with foreign buyers, will receive additional facilities thanks to the euro, which makes property transactions more transparent and convenient to carry out.

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