European housing market rebounds, Bulgaria bucks the trend

Across most of Europe, home sales are picking up speed. In Bulgaria, they are moving in the opposite direction, a contrast with real implications for the thousands of Bulgarians abroad who hold property back home or are weighing whether to buy.

Europe bounces back, Bulgaria stays behind

According to Capital, Eurostat data show that residential property transactions grew in 17 out of 20 comparable European countries during 2025. A year earlier, six countries had posted declines. By 2025 only three were still shrinking: Bulgaria, Croatia, and Poland. Slovenia led the recovery with nearly 30 percent more deals than in 2024, followed by Lithuania at 22.8 percent and Austria at 21.4 percent. France recorded over one million transactions for the year, the only country to reach that scale among those with comparable data.

The broader European recovery, Capital reports, followed a period of sharp mortgage rate increases. Once rates stabilised, buyers who had held off gradually returned. In Bulgaria, mortgage credit is already cheaper than in the eurozone, so that catalyst is largely absent. Capital points to two other forces cooling the market: rapidly rising property prices that have eroded affordability, and fading expectations around Bulgaria's anticipated euro adoption. Bulgaria remains outside the eurozone, meaning its mortgage rates are set independently and stay below EU averages, yet that has not translated into more transactions.

A market splitting by quality, not collapsing

None of this signals a crash. Official statistics from Bulgaria's National Statistical Institute, cited by Standart, show residential prices were 14.8 percent higher in the first quarter of 2026 compared with the same period a year earlier. Quarter on quarter the increase was 6.2 percent, and in Sofia alone prices rose 5.8 percent over the previous quarter. Fewer transactions, then, but not cheaper flats.

What is changing, Standart reports, is buyer behaviour. Real estate investor Ivo Dimovski, speaking on Bloomberg TV Bulgaria, said that buyers in 2024 were often willing to overlook quality shortcomings to park savings in property. In 2026, he noted, that tolerance has largely disappeared. Buyers are more selective, and bank valuations have begun to adjust slightly, which Dimovski described as a healthy corrective signal rather than a sign of distress.

Standart also reports that speculative flipping of off-plan apartments, a strategy that produced returns of 20 to 40 percent in the three or four years before 2026, has cooled considerably. Rising construction costs and slower price appreciation mean the discount offered at the early building stage no longer offsets the risk for many buyers. Off-plan purchases have not stopped, the report notes, but they are increasingly concentrated around developers with proven track records.

Panel-block apartments remain in demand because of their lower entry prices, though Dimovski suggested that segment may be approaching its price ceiling. He also noted, as a personal benchmark rather than a market average, that net rental yields around 3 percent are below the 5 percent threshold he considers worthwhile for an investment property.

What this means for buyers abroad

For diaspora investors, prices are still rising, liquidity is tightening, and the quick flipping gains of recent years are gone. Well-located, good-quality properties in Sofia and larger cities continue to hold value, but buyers considering a purchase from abroad should check developer reputation carefully and obtain an independent bank valuation before committing.