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House prices in Bulgaria “set to rocket”

House prices in Bulgaria have risen by 27% in the past 12 months and are set to rocket further, according to the latest issue of Quest Bulgaria magazine.

The September issue of the leading independent English language magazine for people living or buying in Bulgaria, says the latest forecast shows price increases of 20% this year. A steady stream of investors has made sure the Bulgarian property market is maintaining it's dynamic position. The country's National Statistics authority says that prices rose 15% in the first six months of 2007 with a 27% increase in the past year. And Address Real Estate, the country’s largest agency, forecast a further increase of 10-15% for the rest of the year.

The cheapest homes, said Chris Goodall, managing director of Quest Bulgaria, are in the region around Sofia where prices are £152 ($306) per square meter - well behind the national average of £347 ($700) per square meter. “This makes the area round Sofia a good bet for investment,” said Goodall. "Demand is moving away from the beach toward both urban and rural properties and is being driven by four factors: the level of foreign investment; the emerging Bulgarian middle classes who want modern apartments; increasing local affluence; and the supply of capital from mortgages. “Those buying property in the countryside are buying attractive village homes. Most of them are foreigners, in general early retirees and families who want to own property and enjoy the low cost of living, along with affluent Bulgarians from Sofia and other cities who are looking for weekend or holiday homes in the best rural areas.” One of the biggest factors affecting affordability is the availability of mortgages and home loans. The Credit Centre, a loans consultancy, says that home loans this year are up by 25% with June mortgage lending outpacing even the historically high December loans.

Bulgaria’s soaring property prices, says Quest Bulgaria, follow the pattern of what has traditionally occurred in other countries following EU accession. But despite this, they remain up to 40% lower than Poland, the Czech Republic and Slovakia.

So where are the hot spots?
Quest Bulgaria says that Sofia is still good - but be wary were you buy in the city; the countryside, in and near the prettiest villages; spa towns for the tourism potential; and Varna, the most western European city in Bulgaria. It warns that Bansko is going down in value with too much development and parts of the coastal belt where there is also over development. But, says Goodall, the top tip for home buyers is to invest in a period property in protected areas such as museum towns and villages. (