Housing Prices Rise in Sofia, but Affordability Improves

Housing affordability in Sofia has improved since the pandemic, making it one of the few capitals in Central and Eastern Europe (CEE) to experience this positive trend, according to a report by Colliers International. The consultancy examined housing affordability from two key perspectives: the ability of an average salary earner to secure a loan from a bank based on monthly payments equaling 30% of their income, and the ratio between average apartment prices and annual incomes. In Sofia, strong wage growth has played a crucial role in enhancing affordability, with average wages nearly doubling compared to 2024.

In contrast, Bucharest has seen a slight improvement in the ratio of house prices to income, though high interest rates have diminished the favorable lending conditions available to borrowers. Meanwhile, the situation has worsened in other CEE capitals like Prague, where mortgage rates have risen significantly and housing prices have outpaced the improved household incomes. Other capitals, such as Bratislava, Warsaw, and Budapest, have also seen a deterioration in affordability. In these cities, higher mortgage rates, coupled with significant increases in home prices, have pushed affordability further out of reach.

Colliers notes that in most cases, homebuyers are two-person households with combined incomes, making it easier for them to manage mortgage repayments compared to single buyers. Additionally, those with higher incomes may find it easier to secure more favorable loan terms, with some banks allowing up to 40% to 50% of household income to be allocated to loan repayments.

In terms of prices, Sofia's housing market has experienced a 60% increase in home prices since 2019, with the average cost per square meter reaching €1,600 in...