Despite promises of increased transparency and the lure of deep discounts, Bulgarian real estate values are liable to see another 10% decline. December saw a spike in transactions, though, in anticipation of legislation banning cash deals and calling for accuracy in appraisals as part of property disclosure. See the following article from Property Wire for more on this.
Residential properties in Bulgaria could fall by another 10% in the next six months followed by a period of stabilization, it is claimed.
Prices have already fallen by an average of 20% nationwide in 2009 compared with 2008, says the latest analysis from Colliers International. Now the next few months are likely to see further falls, the international consultants say.
It was hoped that 2010 would see a recovery in the hard hit Bulgarian real estate market as already lower prices would entice buyers back, especially those seeking a bargain.
Analysts also believe that a new law just passed by parliament aimed at making the real estate market more transparent will have little effect. Bulgaria is notorious for corruption and under the counter pay-offs.
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The new rules which mean that all transactions must be done through a bank effectively outlaws cash payments, but according to Atanas Darov, chief executive of Colliers in Bulgaria it will have little or no effect on the current market conditions.
He told a local news agency that real estate would continue to be sold at prices different from the official appraised values and that cash payments would continue to be the norm.
‘If the Government wants real transparency in the industry, it must implement measures whereby the cash flow would be constantly monitored and evaluated,’ Darov said.
The new law was to have been introduced on January 01 but it failed to be approved by parliament in time. Members of parliament finally approved the legislation earlier this week outlawing cash transactions on real estate payments.
It will bring transparency to the real estate sector and thwart fraud, according to Justice Minister Margarita Popova. If implemented properly, the scheme would also boost revenue for municipalities, increase the banks’ influence over deals and reduce interest payments on loans, she added.
Popova said it is essential that the law enforces the notion that in the property disclosure form, the appraised value of the property reflects the actual price of the transaction.
The Colliers report also shows that real estate deals more than doubled in December 2009, compared to October and November, and trebled compared to August and September.
The sudden rise in transactions was sparked by alarm on the part of both buyers and sellers that the new measure could entail properties being re-appraised and re-evaluated at a considerably higher figure, meaning that both sellers and buyers would have been burdened with higher taxes.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.