site.btaBulgarian Residential Property Market Shifts from Euphoria to Normalization, Analysis Shows

After years of strong growth, limited supply and accelerated decision-making, the residential property market in Bulgaria is beginning to recalibrate – not through a sharp shift, but through a gradual transition to a more balanced and sustainable dynamic, experts from SORENDA Real Estate said in an analysis received by the Bulgarian News Agency (BTA) on Monday. According to them, this is not a downturn, but a natural “maturing” of the market – a process in which the link between price and real value begins to be restored.

“At present, we are observing normalization. Decisions are no longer taken impulsively, but are more carefully considered – both by buyers and by investors,” the analysis states.

More Supply, Less Euphoria

According to the company, one of the clearest signals of this change is the increased supply. In certain areas of Sofia, where a year ago there were two to three competing offers, they now reach 10 or more. As a result, transactions are taking place more slowly, while negotiations are becoming longer and more detailed. In some cases, this is leading to adjustments – not only in prices, but also in the terms of deals.

According to market data, in 2025 housing prices increased on average by around 11–12%, while in certain areas of Sofia the growth exceeded 20%. It is precisely this accelerated growth that underlies the current “cooling”, the company commented.

One of the key changes currently being observed is a shift in focus – from expectations to real economic factors, the company said. Much of the so-called euro effect had already played out in previous years. Today, the market is driven far more by fundamental factors – incomes, employment and access to credit, SORENDA Real Estate noted, adding that this makes the market more predictable, but also more sensitive to the macroeconomic environment.

Buyer Has Changed

According to the company, the profile of the buyer is also changing. Today, clients arrive prepared – with a researched area, compared offers and often with pre-approval from a bank. Among younger buyers in particular, a clearly rational approach is evident – they calculate their budget in advance, including all associated transaction costs.

“We are seeing fewer decisions driven by fear of missing out and far greater attention to details such as construction quality, infrastructure and long-term value,” SORENDA Real Estate said.

This shift is also leading to another effect – the share of purchases for personal use is increasing, while purely investment transactions are beginning to decline. According to market estimates, they may fall from around 25% in 2025 to 10–15% in the coming period, the analysis forecasts.

Off-plan transactions remain an important part of the market, but now follow a completely different logic, the company noted, emphasising that while in previous years clients were willing to take on greater risk, today trust in the developer is key. A track record of completed projects, a clear concept and quality of execution are becoming decisive factors. In addition, developers are changing their approach – instead of mass construction, more and more companies are turning to more manageable projects with higher added value. Early-stage sales are also becoming more moderate – a healthy range is now around 30–40% of apartments, compared to 60–70% in previous years, the company reported.

Buying Value, Not Square Metres

One of the most significant changes is the shift from buying square metres to buying value, SORENDA Real Estate summarised. Clients assess a property as a complete product – location, environment, access to transport, green spaces, construction quality and long-term maintenance. Even details such as exposure (with a clear preference for southern orientation), functional layout and type of heating are becoming key factors in the decision-making process, the company noted.

Interest Rates after Euro Adoption: Stability with More Discipline

Bank lending remains a key driver of the market, with around 70% of transactions in Bulgaria linked to mortgage financing, the company reported. This makes access to credit a crucial factor for activity – both for purchases for personal use and for investment decisions.

Following entry into the euro area, an important structural change has been observed – the release of significant resources in the banking system due to the reduction of mandatory reserves from around 12% to close to 1%, which, according to the company, creates conditions for maintaining favourable lending terms and high liquidity.

In this context, the company said market expectations are that interest rates on housing loans will remain stable in the short and medium term, without sharp upward pressure. At the same time, however, banks are becoming more cautious. Creditworthiness assessments are stricter, particularly against the backdrop of global uncertainty and potential inflationary risks. For investment purchases, higher down payments are often required or more conservative conditions are applied to offset the higher risk.

“Bank lending will continue to be a key driver of the market. The stable banking system and relatively favourable loan conditions support demand, but any change in the interest rate environment is quickly reflected in activity,” SORENDA Real Estate said.

Thus, the market is being shaped by the balance between accessible financing and higher requirements – a combination that limits speculative transactions and directs demand towards more sustainable solutions, the company said.

Slower, but Healthier Market

The time needed to complete transactions is increasing – a natural result of the more balanced market and the more cautious behaviour of buyers, SORENDA Real Estate noted. Buyers are considering more alternatives, conducting more viewings and rarely making decisions under pressure. At the same time, there is a clear gap between the expectations of sellers and buyers – entirely logical after a period of rapid growth. Some sellers still anchor their expectations to peak price levels from recent years, while buyers are significantly more pragmatic and sensitive to the real value of the property. This leads to longer negotiations and, in some cases, to adjustments – both in prices and in the terms of deals. Over time, this imbalance is gradually smoothing out, which is a natural part of the normalization process. It is precisely at this stage that the market becomes healthier – with fewer impulsive decisions and a clearer link between price and quality, the company said.

What Comes Next

Expectations for 2026 are for continued price growth, but at a significantly more moderate pace. There are no indications of a sharp correction, but rather of stabilization – a market that continues to grow, but in a sustainable manner, the company said, adding that it is precisely in such an environment that projects with real value stand out, which is the clearest sign that the market is no longer in a state of euphoria, but in its next, more mature phase.