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UBB: Growth of the economy and of housing prices
29 June 2025
While analyzing recent data of the National Institute of Statistics UBB comments on key trends of this country’s economy and on the housing market.
Over the first quarter of 2025 the Bulgarian economy grew faster than anticipated, with actually 3.1%, as compared to the first quarter of 2024.
„On the demand side the economic activity was once again driven by consumption, which solidly grew by 7.2% (in real terms) upon a dominating relative share of 80.1% in the GDP structure. The peculiarity over the said quarter was that investments also registered a substantial increase by 7.9%, which based on their smaller relative share of 17.7%, also supported the GDP growth“, explained the Chief Economist of UBB, Emil Kalchev, PhD. In that context export continued shrinking by 3.2%, while import registered a stable growth by 4.6% over the quarter.
As regards production the growth there was triggered by services, construction and agriculture. The construction industry was the fastest to increase its output – by actually 7.6%, however its impact on growth was not that strong, due to its modest relative share of 3.7% in the GDP. „Although slower than construction, services also increased substantially - by 3.4% per annum, thus strongly supporting the growth of the economy, given their large relative share of 64.2% in the GDP.“, added Kalchev. Under these circumstances the contribution of agriculture to economic growth was close to insignificant, given its smallest relative share of the economy being only 2.8% and its negligible growth over the quarter by 0.2%. The industry on its part contracted by 3.1% and given its significant share of the GDP, being 16.5% exerted discernible restraining effect on the GDP dynamics over the first quarter.
„It has been due to the strong first quarter, the improved image of Bulgaria due to the positive convergence reports and the probability of parliamentary support for the government (at least) until the euro adoption date of 1 January 2026 that we have revised our forecast upwardly from 2.4% up to 2.8% for the current year and from 2.6% up to 2.7% for 2026.“, also noted Dr. Kalchev.
According to recent data of the National Institute of Statistics over the first quarter of 2025 housing prices in Bulgaria grew by 15.1% (in total), as compared to the same period of last year, as their pace slowed down versus the fourth quarter of 2024, when their annual increase reached 18.1%.
Contrary to previous quarters the housing price index accelerated from 2.7% for the fourth quarter of last year up to 4.2% for the first quarter this year. Based on this indicator the most intense surge in prices was observed in Ruse town (9.0%), followed by those in Varna city (5.8%), Stara Zagora town (4.0%) and Plovdiv (3.7%).
„Altogether housing prices are being preconditioned mainly on demand, which is high, especially in bigger cities. People earn more and want to be active in this market. There are Bulgarians who work abroad and invest in real estates here. Others relocate to larger cities and also contribute to the increase in demand. Savings in banks do not bear yield due to the high liquidity in the sector, and the market of investments is still immature. Thus, a substantial part of private individuals’ savings is still being routed to buying residential real estates. Apart from that, the forthcoming accession to the Eurozone also strongly supports demand, as the general public believes that residential real estates (mostly apartments in larger cities) will become more expensive after adopting the euro. At the same time the market of mortgage loans is expanding thanks to some of the lowest interest rates in Europe, presently applied in Bulgaria.“, commented Dr. Kalchev.
„It is in this context, and while taking into account the Q1 data that we have increased our forecast for housing prices in 2025 from 9.7% up to 13.5% on an average annual basis“, also shared the Chief Economist of UBB.
