Real estate has always been a topic around which many myths and misconceptions revolve. Some are passed on by word of mouth as "undeniable truths", but the reality is often quite different. Today we're going to debunk some of the most popular lies about the property market and find out what the truth is behind them.
This is one of the most common statements that makes people buy at any price because "tomorrow it will be even more expensive". But the truth is that the property market is cyclical - there are periods of growth, but also periods of decline.
A prime example is the 2008 crisis. After the market crash, prices in many places around the world, including Bulgaria, recovered to their previous levels only after 10 years. People who bought property in 2007 at high prices were often forced to sell at a loss or wait more than a decade to recoup their investment.
What does this mean for you? If you're planning a long-term investment, buying may be a good idea, but if you're counting on a quick profit, you need to analyze the market carefully.
This statement sounds logical, but it is not a universal truth. In some cases, renting can be much more sensible than buying.
Example: if you're a young professional who has just started working in a big city but you're not sure if you're going to stay there long-term, buying a home can limit you. Instead, renting gives you the flexibility to change locations without tying yourself into long-term loans and commitments.
Buying a property brings additional costs - taxes, repairs, maintenance, interest on the loan. Before making a choice, consider all factors, not just popular opinion.
Many people think that any investment in property guarantees a profit, but this is not true. Profitability depends on many factors: location, demand, condition of the property and even legal changes.
Example: owners who have bought properties for short-term rentals through platforms such as Airbnb have faced legal restrictions in a number of European cities in recent years. As a result, many have had to reduce prices or switch to long-term rentals, which are not always as lucrative.
So before investing, analyse the market well and make a realistic account of potential income and costs.
In theory it sounds good - you buy a cheap old apartment, renovate it and sell it at a profit. But the reality is often different.
Example: you buy an old apartment in the center of Sofia for 100 000 euros, you plan a renovation for 20 000 euros, but in the process it turns out that the plumbing and electrical installations need to be completely replaced, which doubles the budget. In the end, the investment may exceed the cost of a new apartment with the same features.
The truth is that brokers can give advice and recommendations, but the final decision on price is always the owner's. The irony is that often the owners themselves "inflate" prices under the influence of market euphoria.
How does this happen? The owner sees high offers on the internet, listens to friends who tell him that "his apartment is worth at least 2000€/sqm", and thus falls into the trap of his own expectations. Brokers can give a recommendation based on market analysis, but in the end the decision is entirely in the hands of the seller.
Often owners set an unrealistically high price because they are emotionally attached to the property. This leads to long periods without a sale, and sometimes a loss if the price subsequently has to be significantly reduced.
Besides, brokers only profit if there is a deal. If they set the price too high, there are no customers, no deal and they get nothing. Therefore, it is in their interest to keep the price realistic and competitive.
Many buyers find that the downtown location guarantees the best living and highest property value. This is not always the case.
Example: you buy a small apartment in the centre for 200,000 euros but realise that parking is a problem, noise is constant and space is limited. At the same time, for the same price in the periphery you can have a spacious apartment with a garage, green areas and more amenities.
Depending on your needs and lifestyle, "further away" doesn't necessarily mean "worse".
Many people believe that if they wait, they will buy at the "ideal price". But history shows that attempts to "outsmart" the market are rarely successful.
Example: in 2018, many people refused to buy, expecting a drop in prices. Instead, properties continued to appreciate and today the same apartment costs 30-40% more.
The decision whether to buy should depend on your personal capabilities, not speculation about the market. If you've found a property that suits your needs and budget, don't delay too long. Ultimately, it's important not to buy "at the lowest price" but to make a deal that makes sense for you.
Today, we live in an unprecedented market where high incomes, affordable lending and low interest rates are supporting a huge demand for property. This is the main reason for the high prices - people can afford more and this is driving up property values.
But how long will this period last? No one can guarantee. Interest rates are already starting to rise, the cost of living is rising, and in a possible financial crisis or recession there could be a cooling of the market.
So the best approach is not to be guided by myths, but to make decisions based on real analysis. After all, successful deals are not made on the principle of "buy now because tomorrow it will be more expensive", but with a well thought out strategy that meets your real needs and opportunities.