This year there is about 14% growth in construction in Veliko Tarnovo and the region. It is close to the national average, which according to statistics is about 17% compared to 2020. The main part is housing, while the municipalities focus mainly on the construction of new infrastructure projects.
About 6,000 people are employed in the field of construction in Veliko Tarnovo district. Companies from other districts of the country are also coming to the region, and their number is increasing. Some of them fall into the gray sector and cannot be reported by the Chamber, as construction up to 100 square meters does not require registration with the construction organization.
A major problem in construction is the ever-rising prices of construction materials
In seven months, the prices of construction materials rose at a double-digit pace, unprecedented for ten years. Construction is becoming more expensive, but it seems that for now entrepreneurs and investors take it from their margins, and do not pass it on to home buyers. However, if the trend with the prices of materials continues, builders and investors will most likely start heavy negotiations on who will pay what part of the difference.
The sector believes that it is only a matter of time before it is passed on to the final buyers. For now, they feel the rise only indirectly – in that some investors are limiting green sales to minimize losses. This shrinks supply and further pushes housing prices up.
Free money, negative bank interest rates, people’s desire to protect their savings from inflation, the lack of investment alternatives, the active market, and the funds from the gray economy that seek realization, work in the same direction anyway.
It is possible that the rise in material prices will calm down and the demand for apartments will not remain at current levels, so the effect may be temporary. But the situation makes the market much more nervous, restless and uncertain. Participants become much more cautious. If they have previously made offers with a price validity of one month, it is already common that the offer is current, and the seller reserves the right to change it at current prices.