Bulgarian banks could determine whether the country’s depressed real estate sector sees prices fall even further, as there are concerns that they may start to sell off foreclosed properties, according to Address, a Bulgarian real estate company.

It claims that the banks combined with foreign real estate investors had a major impact on the country’s property market by offering low interest rates at a time when home ownership was encouraged. However, the global economic downturn has resulted in a drop in incomes with a rise in loan defaults and foreclosures, according to Address.

Address believes that if 2010 proves to be a more difficult year than 2009, the banks might change policy despite trying to stay away from an overall policy of foreclosing, and have a significant effect on the market.

The company stated that if banks start selling foreclosed properties in search of quick returns there is a serious risk that the property market could collapse altogether.
In 2009, property prices fell by around -20% on average nationwide, in comparison to 2008 figures but prices could fall by another -10% in 2010, according to Colliers International, although it does predict that prices will stabilise in the second half of the year.