As Bulgaria's stock exchange took a serious hit amid worldwide stock plunges and predictions, it emerged that last year's strong growth in housing prices would not be repeated this year, a new survey found. And, the country's relatively rich are getting relatively richer.

In Bulgaria's first year of European Union membership, households earning more than 2000 leva a month tripled...from one per cent in 2006 to three per cent in 2007.

But for 56 per cent of society - the poor, the elderly, small town and village dwellers - the rate of rise in incomes was slower, according to the poll by Noema agency, released on January 22 and quoted by Bulgarian news agency BTA.

Indicators from other sources indicated causes for concern. Inflation was recorded at 12.5 per cent at the end of 2007 and as it began to bite, household consumption growth had begun to recede from mid-2007, going by figures released by Bulgarian National Bank (BNB). BNB said increasing consumer price inflation had dampened consumer confidence about 2008.

Also worrying were the BNB figures on the growing current account (CA) deficit. Rising imports, powered in part by increasing consumer borrowing, pushed the CA deficit to 18.5 per cent in January-November 2007, from 12.5 per cent a year previously. Imports in the first 11 months of 2007 added up to 18.9 billion euro, while exports were 12.3 billion euro.

The opening days of 2008 saw the Bulgarian Stock Exchange (BSE) infected by the troubles of bourses worldwide, with BSE indices shedding 30 per cent by January 22. However, BTA quoted Tsevtoslav Tsachev, head of the analysis department of Elana Trading, as saying that there was no reason to believe that the BSE would crash. He attributed the indices' fall to the worldwide trend, and said that by late on Tuesday, there had been some recovery on the local bourse.

Given that the strong focus on Bulgaria's real estate sector, much attention was paid to forecasts by leading estate agencies Address and Yavlena that the strong growth in housing prices in 2007 would not be matched this year.

Address executive director Katya Tsenova said that apartment sale prices in 2007 in Sofia had gone up by 25 per cent, the highest growth in the past three years. In Varna on the Black Sea, there was 20 per cent growth, reaching an average 852 euro a sq m. Address's forecast was that residential property price countrywide this year would be somewhere between 10 and 15 per cent. Currently, the national average price a sq m for residential property is 737 euro.

However, there seemed scant reason for gloom. Bulgarian-language media reports following the release of Address's forecast said that the undersupply of land in cities and towns where developers wanted to build made it a sellers' market, with ample compensation in the form of apartments being offered in return for selling property to open the way for residential developments.

Real estate and tourism made up 60 per cent of 2007's foreign direct investment (FDI) in Bulgaria, InvestBulgaria Agency head Stoyan Stalev said on January 22. FDI last year was about 5.3 billion euro, 20 per cent higher than in 2006, but was expected to grow at a lower rate this year, about 10 per cent, he said. A policy shift in Government support to encourage foreign investment would take place this year, with the emphasis shifting from real estate and tourism to hi-tech, education and health care, BTA quoted Stalev as saying.