Bulgaria has been lying low……

Bulgaria has had a low profile on the World stage of late. However there have been developments in this country which are worthy of writing about.

The Bulgarian economy is expected to grow by about 0.4% at the year end, according to the International Monetary Fund (IMF). Whilst not a ringing endorsement for an economic turnaround, it nevertheless compares favourably, with overall growth expectations for the Euro Area of 1% in 2010, which was down -4.1% in 2009. It has benefited from a good tourist season, sound retail sales and a rise in exports which have boosted growth.

In 2011 the turnaround is anticipated to be well under way with growth of between 2 and 2.5% as the recovery spreads to domestic demand and the country is not so reliant on exports, as a driver of growth.

Bulgarian Property Market

The Bulgarian property market has been in the doldrums, as many property markets around the world have, but only now does the mist seem to be rising. It has experienced house price declines of -26% in 2009* but this Bulgarian property price decline is slowing down, in the first quarter of 2010, the annualised decline is 18%. Whilst this does not paint a picture of a buoyant market, the Bulgarian property market has fared better than Ireland, Spain (the unofficial statistical picture), Dubai, a number of Baltic States and is now sniping at the heels of Croatia.

Bulgarian Mortgage market

Whilst the financial picture has become quite tight, for individuals wanting to get mortgages, the Bulgarian banks have weathered the financial crisis well. This can be witnessed by the fact that the country’s banks’ capital adequacy ratio at end-June 2010 was 18 percent, which is well above the regulatory minimum of 12 percent.

In line with what we have seen elsewhere, bad loans have risen with the downturn. But the extra padding the Bulgarian Banks have built-in, appear to have been prescient and prudent, even after the new Basel III requirements.

Countries that had the biggest booms during good years, suffered the most severe downturn during the recession. One of the main lessons is that it’s better not to let credit booms get out of hand.

Several high street banks are Greek-owned or have Hungarian or German parent companies, which have tended to retreat back more to home territories. The Bulgarian banks remain wary and are also tight on lending, particularly in more rural areas. This has made it challenging getting mortgages for property in Bulgaria, but given the Bulgarian Banks’ lack of exposure to poor credit risk, they are in a position to lend quickly, when they regain appetite to do so.

* Knight Frank 

Author Louise Reynolds, Property Venture^®  Posted 3rd November 2010

Property Venture®, is an independent, European property expert, who helps people buy holiday homes and investment property in Europe and the Mediterranean, more easily and safely than they can on their own, because they offer grounded common-sense advice. Their focus is mainly: Spain property, Turkey property, Poland property, Morocco property, Cyprus property, Bulgaria property and Montenegro property. They are overseas members of the professional body: National Association of Estate Agents, the NAEA. This means they have been subjected to the membership criteria and have signed up to the professional code of conduct, established to help potential buyers or investors, buy overseas property with confidence.

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