The total number of sales has decreased dramatically during the last year, and the buyers still in the market prefer to continue their wait, expecting the prices to go even lower.
In order to fully comprehend the complex situation, which the Bulgarian properties' market is in, we must first analyze it.
Today there are more than 4 000 000 residential homes in Bulgaria and about 14% of them are situated in the capital city of Sofia.
Relatively small amount of them are rented - 8% in the capital and about 15% in the rest of the country.
There is a high number of deserted and unusable homes - 14 to 16%, while most of the apartments are older than 20 years and of relatively low building quality - an inheritance from the communist regime.
The statistically average flat in Bulgaria consists of 2.
8 rooms, has 64 sq.
of usable space and 2.
1 people living in it.
The data above shows that there are still too few homes of modern standards, thusly the buyers in the market of the future will be looking for apartments of higher building quality and applied energy-saving solutions, in addition to a good transport infrastructure nearby.
Another specific feature of the Bulgarian Real Estate market is the extremely loose relationship between the apartments' prices and the cost of renting.
While in the countries of Western Europe a typical flat can be bought for the amount of the rent for 8 to 12 years, the same relationship in Bulgaria is between 25 and 40 years.
This unusual correlation is founded in the fact that more than 90% of the Bulgarians live in a home that they actually own, so there are much fewer people looking to rent and, in market terms, a combination of large supply and weak demand, which drives rent prices down.
This is good news for anyone who is looking to rent, however the economic downside hides in the decreased profitability of the investments in Real Estate, thus creating a negative development trend in the long run.
Between the years 2000 and 2008 the prices of the Real Estate properties in Bulgaria shot up nearly 400%.
This massive change was due partly to the increases in the Gross National Product and average monthly salaries, but also to the successful attracting of foreign investors, who introduced capital in the interconnected economic sectors of tourism, Real Estate and construction of more than 10% of the GNP in '06, '07 and '08.
From a geographical perspective, the demand for properties during those years was strongest in the vocation areas - the regions adjusted to the Black Sea and the larger winter resorts in the mountains of Rila, Pirin and Rodopi.
The global financial crisis that devastated the Bulgarian Real Estate market during the last year and a half originated in the USA and began there in 2005 with, incidentally, the burst of the American housing bubble.
The result was the subprime mortgage crisis that followed in 2006 and 2007, which brought a surge of foreclosure activity and in turn fueled the fears of the market and depressed even further the already sinking prices of Real Estate.
The next and final step in the financial storm was the collapse of major lenders and investors, which signaled gloomy days ahead as the worldwide economic recession ensued.
Bulgaria felt the hit on its economy in the middle of 2008 through a devastating blow delivered to the Real Estate market and the adjusted industries.
In the following months the liquidity dried up, the participants were nervous and reluctant to close deals, the vast foreign capital that used to flood the market disappeared and on top of that the local banking system stopped to finance mortgages practically overnight.
As of now, more than one year later, the economic situation worldwide and particularly in Bulgaria is very complicated and the crisis is far from successfully resolved.
So far the cost of properties has fallen across the board with at least 25 to 30% from the levels before the bust, but even more worryingly, the market seems uneasy with the new prices and the activity remains extremely low, which suggests that worse times may lie behind the corner.
There are however other indications of what could soon be a positive turn of events, as the banking system is starting to open up and credit is once again available to help with the healing of the economy.
It is impossible to say how the Real Estate market will be influenced and to what extend, what is certain is that the years of economic boom that drove the properties so high up in value are not going to repeat themselves any time soon.