- In June, banks granted BGN 1.237 billion in mortgage loans.
- This represents a 22% increase compared to May and over 36% compared to June last year.
Reasons for the strong demand:
- Record demand for housing, despite high prices.
- Low interest rates and high liquidity in banks.
- Expectations that the eurozone will have a positive impact on investment.
- Lack of alternative financial instruments – the main investment options are deposits and real estate.
Buyer behavior:
- Mass buying with loans.
- Even wealthy people often prefer to take out a loan rather than use their own capital.
- Some people consider buying real estate a form of protection in the event of a crisis.
Problems and risks:
- Circular effect: Loans – increased demand – rising prices – need for even larger loans – further price increases.
The gray economy:
- About 30% of Bulgaria’s GDP is in the gray economy.
- A significant portion of this money is “laundered” through the purchase of real estate.
- It is expected that with the introduction of the euro, some of these funds will be legalized.
Key conclusions:
- The housing market is booming, driven by loans and high liquidity.
- The lack of investment alternatives concentrates capital in real estate.
- The gray economy plays a significant role in property demand and prices.
- Joining the eurozone may accelerate the process of legalizing “gray” money.
