Property prices in Bulgaria are expected to keep falling during the first six months of 2011 according to local estate agents. Official figures recently released from the National Statistical Institute (NSI) show that residential property prices have already fallen substantially since the credit crunch, which led to a complete withdrawal of potential buyers from the UK, Ireland and Spain.

At the end of 2010 the NSI reported that average property prices in Sofia had fallen to BLG 1,569sqm (£673sqm) and the cheapest real estate prices were recorded in Kyustendil at around BLG 565sqm (£242sqm).

Property prices peaked in 2007 when transaction levels reached an all time high, and since then most property prices in Bulgaria have fallen by around one-third in value and the number of sales being made over the last four years has almost halved for residential properties, commercial buildings and land. The amount of building permits granted has also dropped.

But all is not lost for UK property investors that bought in Bulgaria back in 2007 because the Bulgarian Leva has appreciated by 29% against Sterling over the past four years from just under 3.0 Leva to £1, to 2.33 today, so selling at the current market value would result in a small loss of 5% plus fees assuming you bought the property with cash.

If you were highly geared however, you will have seen the value of your debt increase by 29%, when compared to sterling, and the value of your property depreciate by one-third.