The Euro’s Effect on Real Estate Prices in Bulgaria

The residential property market in Bulgaria is in the spotlight of expert analyses, as recent years have been marked by rapidly rising prices, record transaction volumes, and an active mortgage segment. Although the data indicates stability, this often reflects expectations and narratives rather than purely fundamental economic factors.

Joining the euro area will create a new institutional framework, but its impact on housing prices is expected to be indirect - mainly through access to credit and banking behavior.

Experts are unanimous that the market is nearing its peak, with future challenges arising from shifting buyer attitudes, lending dynamics, and the balance between supply and demand.

Borislav Gostev, General Director of Super Credit

2025 is shaping up to be a peak year for the real estate market, with prices expected to grow by 15–18%, supported by strong demand and limited supply. From 2026 onward, a normalization toward a more moderate single-digit growth rate (6–10% annually) is forecast, aligned with income growth and potential new macroprudential measures by the Bulgarian National Bank in response to the active mortgage market. The experience of Latvia and Lithuania shows that housing prices tend to rise even in periods of low inflation, while Croatia demonstrated double-digit growth despite high interest rates. This confirms that long-term price dynamics are driven primarily by incomes, the overall economy, and supply levels, rather than by the currency change itself.

The currency transition will be more of a technical process, since nearly 95% of mortgages are currently denominated in leva, which will automatically be converted at the fixed exchange rate of 1.95583. For 2026, the prevailing outlook among Bulgarian banks is to maintain current reference interest rates, tied to the domestic deposit base. Gradually, some loans are likely to be indexed to European benchmarks (EURIBOR, ˆSTR), which will lead to a gradual convergence of margins with those in the euro area. Interest rates in Bulgaria remain among the lowest in the EU, with current mortgage rates ranging between 2.19% and 2.80%.

The experience of the last three countries to join the eurozone - Croatia, Lithuania, and Latvia - clearly shows that the introduction of the euro does not trigger a sharp rise in housing prices. Data from Eurostat and the European Central Bank indicate a one-off, limited effect concentrated in the first month after the currency change. Throughout the first year, however, price and transaction dynamics were determined mainly by more significant factors: income levels, interest rates, and supply. Euro adoption may cause a short-lived administrative and psychological effect on the timing of deals, but not substantial price volatility. The market is expected to absorb the transition smoothly, without structural disruptions.

The main driver of the market will continue to be Bulgarian households, supported by rising incomes and low interest rates. The most active buyers will remain higher-income households, including a significant share of civil servants whose salaries have increased noticeably. Buy-to-let investors will also maintain their activity in Sofia, Varna, Plovdiv, Burgas, and resort areas, while Bulgarians working abroad - together with foreign buyers - will benefit from easier access thanks to the euro, which makes transactions more transparent and convenient.

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