After several years of boom fueled by expectations of Bulgaria's entry into the Schengen area and then the eurozone, the country's real estate market slowed sharply in the 1st quarter of 2026. The number of transactions decreased to the levels of the beginning of the COVID-19 pandemic. The decline was 15% year-on-year in the country and 12% in Sofia. Experts call the fourth quarter of 2025 a turning point, when, for the first time in three years, quarterly and annual sales figures for both new and second homes decreased simultaneously.
At the same time, the requested prices remain high, but real deals are increasingly taking place with discounts from 5 to 10%. In the first quarter of 2026, the average price of completed transactions in Sofia was 2,680 euros per square meter, which is 29% higher than a year ago, but slightly lower than at the end of 2025 (2,790 euros). The share of discounted deals exceeded 45%, and negotiations became the norm after a period when many people bought at full cost.
The main reason for the cooling is the exhaustion of the "eurozone effect": the expected price increase has already been included in current quotes, and the main free savings of the population have been invested. Buyers are moving from emotional to rational demand, the decision-making time has increased to three months, and the number of views has increased. Sellers often continue to think in terms of 2025, which creates a gap in expectations.
On the contrary, the supply on the market is growing. Agencies report an increase in the number of listings by 20-25%, and market priority is gradually shifting from seller to buyer. The most vulnerable are objects with an inflated price, poor-quality layout or in poor locations. At the same time, liquid apartments at an adequate price are still leaving quickly.
The market is becoming more and more dependent on mortgages: in Sofia, six out of ten transactions involve a bank loan. Interest rates on housing loans remain at record lows of 2.5% and 3%, while offers of about 2.1% are available for reliable customers.
Analysts differ in their forecasts: from expectations of stagnation and price correction for several years to moderate growth of 5-10% this year. The most likely scenario is considered to be a transition to a normal, calmer market without the previous euphoria, where prices will be stable or rise symbolically. The key risks are the war in Iran, a possible increase in inflation and, as a result, a tightening of the ECB's policy, which may affect the availability of loans.
A source: Capital
