'Finding a home in... Bulgaria'

The real estate market in Bulgaria's capital, Sofia, has been growing steadily for a long time, but now that demand has started to approach supply, the market is slowing down.

Four bedrooms in Bulgaria's capital, $4.1 million (€3.6 million)

This four-bedroom, four-bathroom house is located in the Boyana neighborhood of Sofia, Bulgaria's capital, just a few blocks from the foot of Mount Vitosha.

Boyana is one of the most expensive neighborhoods in Sofia, said Polina Stoikova, director of Bulgarian Properties, which is marketing the house. "Boyana is developing as a trendy area of the city, most of the luxury housing is concentrated here. "

The 1,000-square-meter house, built in the 1990s, was designed''by local architect Atanas Panov and includes a sauna, gymnasium and fully finished basement. The one-and-a-half acre site also has a two-car garage and a large backyard with a raised garden and pool.

The owner bought the home in 2006 and made major interior changes, installing sanded oak floors, walls and ceilings, soundproofing walls and doors, and new light fixtures and kitchen, Ms. Stoikova said.

The main feature of the house is the two-story rotunda living room with high windows and views of Mount Vitosha to the south and the center of Sofia to the north. In the center of the room is a large fireplace and a rounded light fixture seemingly hanging freely. The dining area, which has a table for eight, is on the level above''have been 'transformed' during the refurbishment, including new plants and lighting, as well as a granite tile wall surrounding the site.

Market information

Housing prices in Bulgaria have been rising steadily in recent years thanks to the development of the economy and low interest rates, agencies report. Across the country, prices rose by 6 percent in the third quarter of 2018 compared to the same period a year earlier, according to an index provided by Bulgaria's National Statistical Institute.

In Sofia - Bulgaria's largest city, with a population of about 1.2 million people - prices rose by 7 percent in the third quarter of 2018 compared to a year earlier, and by 36 percent compared to the same period in 2015, according to data''gov.

But the market has slowed in recent months, agents report. "There is a clear downward trend in the growth rate of the number of transactions and mortgage lending," said Tatiana Chernyshova, an agent with BiB Group, a Bulgarian real estate agency.

Nonetheless, "we do not expect prices to drop significantly unless something serious happens to the European economy as a whole," said Zlatka Georgieva, a partner at Best Bulgarian Properties.

After a surge in construction across the country, mainly apartments, the supply of housing in Bulgaria has started to match demand, industry officials said. "Developers have actively started building new properties in almost every big city," said Nevena Stoyanova, director of Luximmo,''real estate consulting firm.

Stanislav Petrov, founder and managing director of Select Properties Bulgaria, said more than 80 percent of his clients in Sofia buy apartments with an average price of about 1,120 euros per square meter ($118 per square foot) for a two-bedroom apartment.

Despite the large selection of apartments in Sofia, there aren't many new homes, making houses in neighborhoods like Boyana more expensive, agents report. And high prices lead to slow sales in Boyana compared to other neighborhoods in Sofia.

Who buys in Sofia.

About 80 percent of buyers in Sofia are locals, Ms.

The majority of foreign buyers in Sofia are looking for apartments as an investment," stressed Ms. Georgieva, of Best Bulgarian Properties.

She said her foreign buyers are mainly from European countries such as the UK, Ireland, Belgium and France, as well as nearby Greece, Serbia and Macedonia. It also had customers from the US, Canada, South Africa and Australia.

Shoppers from Russia used to be common in Bulgaria, Ms. Chernyshova said, but with the start of the conflict between Russia and Ukraine in 2014, that market slowed. Now about half of her clients are foreigners, mostly from Germany, France, Belgium and Italy.

Basic information about''buying

Bulgaria, which joined the European Union in 2007, can be a tricky place for foreign real estate buyers. Foreigners are usually allowed to own buildings but not land, although there are exceptions for citizens of other European Union countries. Foreign buyers often set up companies to buy real estate," Mr. Petrov said.

The lev is still Bulgaria's official currency, but its value is pegged to the euro as the country prepares for the official introduction of the euro and real estate prices are usually quoted in euros. Foreign buyers should hire an independent lawyer - not affiliated with the real estate agency or seller - to check for debts on the property and to make sure that the''It has no encumbrances,' Mr. Petrov said.

One peculiarity is that in Bulgaria, patios and other outdoor areas are included in the records, so the living space inside can be 15 to 20 percent less than what is indicated," Ms. Chernyshova said.