What's next for bulgaria?

Banks could hold the key to what will happen with Bulgaria's depressed real estate sector in 2010, it is claimed...

There are concerns that if they decide to start selling foreclosed properties this will lead to prices falling even further. 

Along with foreign real estate investors banks have had a major impact on the country's property market offering low interest rates at a time when home ownership was encouraged.
 
But the global economic downturn has meant a drop in incomes and led to a rise in loan defaults and foreclosures, according to Address, one of Bulgaria's leading real estate companies.
   
The banks have been trying to stay away from an overall policy of foreclosing, but if 2010 proves to be a more difficult year than 2009, banks might Change this policy and appear on the market as one of the big players.
 
‘If banks start selling foreclosed properties in search of quick returns there is a serious risk that the property market could collapse altogether,' said a spokesman.
 
According to its statistics, prices in 2009 dropped by 28% on an annual basis, with 47 % of buyers paying in cash, while 22% of deals were financed with bank loans.
 
The concerns come at a time when analysts are predicting further price falls in the Bulgarian real estate market. According to Colliers International prices could fall by another 10% in 2010 although it predicts that prices will stabilise in the second half of the year.
 
In 2009 real estate prices dropped by about 20% on average nationwide, compared to 2008 figures, according to Colliers data.
 
Some analysts believe that there would be an increase in demand prices and meet buyers expectations of finding a bargain. The worst hit sector has been new builds along the Coast and in the ski resorts. There are also a lot of so-called distressed sellers who are forced to sell at levels even lower than 50% of values.
 
Stephane Lambert of Stara Planina Properties reckons that on average prices have fallen by approximately 35%, based on actual sale prices not asking prices. ‘This is important to highlight because many properties are still marketed at pre-crisis prices and there is a margin for negotiating down the asking price,' explained Stephane.

Source: www.propertywire.com