Mathew Youkee, Editorial manager for Bulgaria Oxford Business Group

As internet searches on Bulgaria show, a plethora of websites are continuing to offer real estate in the country, which confirms that affordable property has become one of the country's defining characteristics for outsiders.

In the past, a large proportion of the investment in Bulgarian tourist property has come from British and Irish citizens. In 2006, about 29 per cent of all real estate sales were made to foreigners - 67 per cent of them to Britons and 12 per cent to Irish. With the UK reeling from an economic slowdown, the credit crunch and a domestic property slump, Britons' enthusiasm for buying foreign real estate may be waning.

Reports in Bulgaria's local press have cast a shadow over the real estate sector, particularly in the holiday property segment. Luchezar Iskrov, chairman of the National Real Estate Association, has stated that the credit crunch and economic slowdown in the West will have negative repercussions for Bulgaria, suggesting that property sales reached their peak some months ago and are now falling.

"As far as the mortgage crisis in the US is concerned, there is clearly an influence in all countries leading to a slowdown in real estate sales, especially in the coming months," Iskrov said.

"The reduction of activity in the real estate market could be a sign that those prices have reached their highest segment level, and the growth rates from 2007 and the first months of 2008 may not be matched again."

If holiday property prices are indeed slowing, another reason may be worries over Bulgaria's tourism sector, particularly as many investors have bought property on a buy-to-let basis.

Despite a three per cent increase in the number of foreign visitors to the country last year - and an 11 per cent increase in revenues - the long-term sustainability of Bulgaria's sun-sea-sand beach tourism model is starting to be questioned. This is partly due to over-development of the coast and fears that standards are being lowered in an effort to optimise short-term profit.

British tour operators TUI and First Choice removed Varna from their list of destinations last year and Thomas Cook is reportedly considering doing the same before 2009. Allegedly, bookings by Scandinavian tourists have dropped by 30-50 per cent on last year. Resorts on the southern Black Sea coast around the city of Bourgas are reportedly suffering the most.

Another report, from the Yavlena real estate agency, suggested that foreigners are looking to sell their Bulgarian property in increasing numbers. However, this trend seems to have been encouraged more by the structure of original purchase deals, and a desire to cash in rapidly, than a fear of property downturn. Many of the houses were bought off-plan (prior to construction) over the past two years and put on the market as soon as they were completed. Nonetheless, headlines of owners "offloading" Bulgarian real estate and a culture of quick profit taking on the market are two things that the country could do without at present.

Despite these concerns, Bulgaria's tourist real estate market may be at a turning point rather than a permanent slump. For several years, industry insiders have told the Oxford Business Group that Bulgaria's coast risked over-development and that short-term investors could pull out if the going got tough.

Having said that, the Black Sea remains a very popular holiday destination, and while the number of visitors from Western Europe is levelling off, more are coming from Russia and other former Soviet countries, as well as Romania.

Moreover, as the tourism sector develops into high-end niches in which Bulgaria has huge potential, opportunities are opening up for investors. New areas of the country - the Rhodope Mountains, for example, and areas around the old capital like Veliko Turnovo - are slowly being recognised as worthwhile places to visit and live.

Although development is likely to be on a more modest scale than in the coastal beaches, these areas are also more likely to attract what Savills describes as the traditional holiday home buyer, who chooses a location for his family to go on holiday, or possibly for retirement. This more affluent section of the population tends to spend a greater amount of money on property and holidays. Savills researcher Jacqui Daley speaking to the British press said, "We will see a return to the traditional use of the holiday home as a lifestyle choice, and that demand will actually rise in the near future."

The days of making a quick buck may be over. But the promise for wiser long-term investors and traditional holiday homebuyers is as great as ever.