The Brits disappear and the Bulgarian housing market crashes

Unfortunately, the overseas property speculator has vacated the Black sea coast. She better turn up soon because the Bulgarian holiday home market is quickly sliding towards total collapse.

According to today's Financial Times, demand for holiday properties in Bulgarian "hot-spots" like Bansko has almost completely evaporated. Two years ago, British speculators were buying around 500 properties a month. Today, sales have fallen to about 30 a month, while the buyers were almost entirely Russians and Greeks.

The sudden collapse of demand has prompted desperate Bulgarians to offer steep discounts. So far, the price cuts have not encouraged the Brits to return. Then again, it would take some pretty hefty discounts to counter the poor construction standards and mediocre rental yields that have typified Bulgarian holiday homes.

However, the comments of Mihail Chobanov, chief executive of Bulgarian Properties, must have sent an ice-cold chill down the spines of the British owners of Bulgarian holiday homes. He believes that about 50 per cent of UK investors who took bought into the Bulgarian market four years ago are now trying to sell their properties. "Speculative buyers want to cash out and move on," he said. Bag-loads of supply and no demand can only mean one thing - housing crash.

For the Bulgarian economy, the disappearance could provoke a major economic crisis. Last year, foreign exchange from property sales paid for about a third of the Bulgarian current account deficit.It was a great scam. The Bulgarians have been selling their dilapidated communist-built shacks for overinflated prices and using the proceeds to buy imports. Now that the Brits have departed, the Bulgarians will have some difficulty in paying for those flat-screened TVs and washing machines.

Well, that is globalization for you; the foreigners come and buy up your home, only to find out later that they scammed you with an over-inflated price. If only it could continue forever.