Банкеръ Weekly



Prices of real estates in Bulgaria continued to go up in the beginning of 2004, considerably influenced by rumours and expectations. The new hike is by some 8-10 per cent. This has additionally inflamed passions, but without giving an idea about the real situation regarding effected sale deals, about which most agencies keep silent. Leading experts from real estate agencies in Sofia pointed out that the jump of selling offers for flats, houses and offices, would additionally cut down the already small number of deals. Sober views of things were voiced as well, according which there were no real economic grounds for a new price rise, but they did not influence the market substantially. As a result prices in the capital city in some individual cases even surpassed those in Moscow, New York and Tokyo. The most frequently mentioned reasons for the upward price tendency are the interest of foreigners towards Bulgarian real estates and the lack of sufficient selling offers. But the purchase of several dozens of luxury real estates a year, at that in two or three preferred regions of the country, could not significantly influence the prices of about 55,000-60,000 selling offers every day.The question is who caused that frenzy and who benefits from it?Obviously, several thousands of really affluent people in this country can afford to make investments in real estates. Some have assumed that the purchase of a flat or house could be more safe than a bank deposit. And it is difficult to check the price as the actually paid money could be different from the value according to the sale contract. For that kind of buyers the purchase of real estates are profitable from all points of view: their money is saved, the check of undeclared incomes is rendered difficult, and their future is guaranteed if their business is not going well. Quite logically, they will benefit from the increase of real estates prices. Thus, if necessary they could easily explain the possession of huge amounts of money by the sale of an estate. Real estate agencies and brokers also benefit from the price increase because they charge as a fee a certain percentage of the effected deal's value. But in order to get remuneration a deal should be closed, and if the price is inadvantageous to the buyer, the broker would be left with his finger in his mouth. Therefore, it is important for the middlemen that the growth of prices is accepted by the market. That is why they are most worried at present. Most of the buyers have already withdrawn in expectation of better times. Sellers also become fewer. What is going to happen in the next few months? The market will probably steady at levels quite below the current prices. But there are still clients who buy real estates out of fear rather than because they actually need them. In most cases these are people who do not count their money. Moreover, prices will continue to go up for some time due to the increased number of sale deals, effected in order to get money for the purchase of another estate. Attracted by the high quotations, people of more limited financial resources sell a one- or two-room flat in order to buy a new or a bigger one, making the difference. Thus, two deals are closed in fact. That is why, stabilization of prices and a more lasting steadying of the market could be expected in the autumn.

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