We expect a slowdown in growth and balancing of the housing market

Mrs. Bozhilova, how does the housing market in Sofia and the other large cities in our country look towards the end of the ninth month of 2022 through the prism of "Advance" data on the number of real estate appraisals prepared, values reached, types of appraised homes?

 In the last nine months of 2022, the market is generally active, both in large cities and in smaller settlements. Our analysis, made on the basis of the entire volume of appraisals prepared for banking and financing institutions, shows a permanent growth trend, both in the total volume of residential properties and in particular in the number of appraised apartments. As a share of our portfolio, the growth of appraised apartments is 7% compared to 2021, and for houses – even more categorically – at 18%. The distribution of types of apartments shows a predominance of three-room apartments - 43% and 39% for two-room apartments. Appraised multi-room apartments are almost twice as much as one-room apartments, which reinforces the trend of interest in buying larger homes. The fluctuations in the real estate market in recent months have not yet affected the trends emerging from 2021, and the volume levels of assessed residential properties are being maintained. We expect the last quarter to remain within the framework of the already formed trends. 

Do Sellers or Buyers Appraise a Property More Often and Why Is This Happening? 

Purchasers are predominantly purchasers who, out of necessity, seek an appraisal for the asset they are acquiring. These are both end customers and lending institutions – banking and non-banking. Credit consultants have also been quite active in recent months, having consolidated their place as participants in the mortgage lending market. On the seller's side, investors are the ones who seek expert opinion on the value of their assets. However, a dynamic market may cause, over time, a wider range of sellers to promptly seek an expert opinion from a certified appraiser to understand the value of what they own or wish to acquire. We advise businesses to actively monitor the market and periodically track the value of their assets to know their liquidity. 

- What does it take to have an expert real estate appraisal? What is the added value compared to existing property valuation platforms? 

The expert participation of the evaluator with his long-term expertise, professional experience and acquired qualifications and competences is undoubtedly the added value for any company. In the age of digitization, automated evaluation platforms are gradually entering our business, and in this situation, it is the experience of the professional in combination with the advantages of automatic models that is the successful formula for development. The system of algorithms cannot replace the inspection of the object that the evaluator performs and through which a place is familiarized with all its specifics. The way, in our opinion, should be in the direction of uniting the know-how of the human factor with the digital potential. 

- At the beginning of last year, the company presented you with an automated model for preparing estimates, which is new for the Bulgarian market. What are the results achieved so far? What new happened in 2022? 

We have created a digital product unique to Bulgaria and the region, which summarizes the expertise of the company, accumulated for more than 17 years. It is an automated product for generating expert evaluations that does not replace but complements the role of the evaluator. The work process is facilitated by the introduction of a mobile application, which allows the appraiser to process the information about the objects he is evaluating, already during the inspection of the object. ALVIS is an innovative product that combines all recognized work standards – European, international, Bulgarian with the requirements of each specific bank and the specifics of each type of assessment. As a result, a database is generated, which is the basis for various analyses, price indices, integration to other platforms. This year, we at Advance joined the Alliance of European Appraisers - EVA, as an exclusive representative for Bulgaria, which gives us the opportunity to gain experience from the leading European appraisal companies and follow the best practices.

 - What are the most serious difficulties in preparing a real estate appraisal? Perhaps the lack of sufficient and quality data on the housing market in our country is one of them? How do you overcome them? 

The lack of unified databases for the real estate market is a problem faced by colleagues from different business spheres. Yes, we need a unified information system for the prices at which real estate transactions are carried out, but we also have a growing need for a system that reflects information on the energy efficiency and sustainability of buildings, enabling us to reflect in assessments and the latest ESG requirements. These are areas in which it is mandatory to seek unification of the interests of the various participants in the community.