When it comes to economic growth it was always a certainty that house prices would follow prosperity, but what of the foreign influx of buyers of Bulgarian property?
If you look at the overall boom and bust cycle of the UK and US stock markets over the past 10 years you will see a strong inverse relationship with the property market. This is due to the fact that when investors are nervous about the stock markets they will usually exit from it into a “safe haven” asset. Historically these have been gold (for the larger investor) and bank deposits or bonds for the smaller investor. However, as interest rates have been close to a historical low and investors have been drawn into the speculation mentality of the dot-com bubble they then searched out gains in the double digits elsewhere. This is where property as an alternative asset class came in.
As more and more speculators bailed from the stock markets after the dot-com bubble burst the real estate market started to rise. This rapid rise fuelled the notion that real estate was the new must have asset class.
Once the property bubble started to expand then the sharks started to circle and started pulling extremely novice would-be investors into the fold with promises of vast riches and wealth with little to no risk, after all they were investing in “bricks and mortar” and property (as with most other asset classes) never goes down over the mid-term right?
As the bubble began to reach its crescendo and growth began slowing the now would-be “property investors” started to put one and one together and come up with eight. If property is so safe and can so such large gains over such a short term then why not get in at the bottom of a new and emerging market. First it was Spain, then France then Florida, but now where?
This is where Bulgaria came in. The market was already starting to show the same signs of growth as the other markets, therefore putting one and one together equals safe, huge growth. Already confirmed as the highest growth market over the past twelve months this has shown to be true.
Rather than reaching a conclusion now on where the Bulgarian property market is going to be over the next couple of years we should look at what short term history has shown us and extrapolate. Will it continue to rise forever?
Research for this article on the Bulgarian property market can be credited to http://www.coralestates.com
