How will Bulgaria's property market evolve after the switch to the euro? This question concerns homeowners, investors, and prospective buyers alike. Typically, euro adoption triggers a surge in demand and price growth, attracting foreign investment. Yet, the currency change's impact cannot be viewed in isolation; broader economic conditions and interest rate policies are crucial factors.

In Sofia, the property market has already seen significant activity in early 2025. Data from Bulgarian Properties reveal that the average price of new apartments in the city reached approximately ?2,080 per square meter in Q1, marking an 18% increase compared to the previous year. Demand continues to exceed supply, accompanied by a rise in building permits. This momentum is largely fueled by expectations of further price growth post-euro introduction, along with buyers seeking protection against inflation through real estate investments.

Despite this upward trend, Sofia remains one of the more affordable European capitals in terms of housing costs and rents. However, the price gap with cities such as Budapest, Ljubljana, and Zagreb is narrowing rapidly. Analysts anticipate that with rising incomes and eurozone membership, the Bulgarian market will continue to grow, potentially aligning with property values seen in southern European cities. This makes the period surrounding the euro adoption particularly critical for all market players.

Looking at comparable cases, Croatia's entry into the eurozone on January 1, 2023, offers a useful example. In the first year after joining, the country experienced a roughly 13% rise in average housing prices, with the capital Zagreb seeing a 15-17% increase. The surge was driven by heightened domestic demand, an influx of buyers from Austria and Germany, and the widespread expectation that prices tend to rise following euro adoption. Tourism and investment interest in coastal areas further intensified this effect - though Bulgaria's market context differs, Croatia's experience signals a likely short-term price spike linked to currency change.

A similar pattern occurred in Slovenia after its eurozone accession in 2007. Large cities saw housing prices climb by 10-15% in the first year, especially in new developments, followed by a stabilization phase. However, these trends were influenced by wider economic factors such as the 2008 global financial crisis, which severely impacted property markets internationally. This highlights that while the euro introduction is significant, its real influence depends on complex economic, social, and market dynamics.

In contrast, Latvia's experience after adopting the euro in 2014 was more moderate, with house prices growing by about 4-5% in the first year. This restrained increase reflected the market's recovery from a deep slump earlier in the decade and the absence of speculative demand. Stricter banking regulations also helped keep growth measured, illustrating that in balanced markets without inflated expectations, the euro's effect on property prices can be subdued and more predictable.

Interest rates will play a pivotal role in Bulgaria's market moving forward. Joining the eurozone means adopting the European Central Bank's unified interest rate policy, which is expected to influence mortgage costs. Currently, relatively low borrowing rates are encouraging demand, but these may shift after euro adoption. On the other hand, the currency's stability and removal of exchange rate risk are anticipated to boost the market's attractiveness to foreign investors, potentially increasing demand and enhancing transparency.

For those considering buying or selling property, strategic timing is essential. Real estate agents suggest that buyers should act sooner rather than later, as current price growth already reflects eurozone expectations. Early buyers could benefit from potential appreciation, and securing fixed mortgage rates for five to ten years might offer protection against future interest hikes. Sellers, meanwhile, face a favorable market with strong demand and urgency among buyers, enabling better negotiation leverage. Post-euro adoption, demand might cool somewhat as market perceptions adjust.

Ultimately, while the euro introduction sparks short-term excitement, long-term real estate trends in Bulgaria will hinge on economic growth, income levels, interest rates, and market stability. Experts foresee steady, moderate price increases consistent with other European capitals. The months before euro adoption represent a critical window where careful planning can yield substantial advantages for both buyers and sellers alike.

Sources:

• Natalia Todorova, dir.bg
• Bulgarian Properties