housing affordability

180 Pages·2017·4.4 MB·English

by  World Bank Group

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BULGARIA
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H o u s i n g S e c t o r A s s e s s m e n t
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By
The World Bank
June2017

HOUSING IN BULGARIA

Organization of the Document

To facilitate ease of reading – given the length and complexity of the full
report – this document includes the following:

- A 5-page Executive Summary, which highlights the key messages;

- A 20-page Short Report, which presents in some level of detail the
analysis, together with the main conclusions and recommendations;

- A 150-page Main Report, which includes the full Situation Analysis,
followed by Findings and Recommendations in detail.
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Contents

Acronyms and Abbreviations IV
Currency Equivalents VI
Acknowledgements VII

Executive Summary 1
Short Report 6
Main Report 27
SITUATION ANALYSIS 29
INTRODUCTION 31
1.1 Context 31
1.2 Relevance to the CPF and other World Bank projects 33
HOUSING AND URBANIZATION 35
2.1 Population Trends 35
2.2 Emigration 35
2.3 City typologies and trends 38
HOUSING STOCK AND QUALITY 41
3.1 Housing Stock 41
3.2 Ownership and Tenure 46
3.3 Housing Quality 50
PROGRAMS, INSTITUTIONS, LAWS, AND PROCEDURES 56
4.1 Current Approach to Housing 56
4.2 EU- and State-Funded Programs in the Housing Sector 56
4.3 Other State support for housing 61
4.4 Public Sector Stakeholders 69
4.5 Legal Framework 71
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4.6 Relevant Legislation and Processes for Housing 80
LOWER INCOME AND VULNERABLE HOUSEHOLDS 86
5.1 Poverty and Deprivation 86
5.2 Roma 90
HOUSING MARKET AND FINANCE 105
6.1 Market Dynamics 105
6.2 Rental Housing 110
6.3 Housing Finance 111
HOUSING AFFORDABILITY 114
7.1 Affordability and Housing Cost Overburden 114
7.2 Income 116
7.3 Housing Affordability: Existing Market 118
7.4 Potential options for lower income households 125
FINDINGS AND RECOMMENDATIONS 127
KEY FINDINGS 129
8.1 High vacancy rate, surplus and overcrowding 130
8.2 Poor quality of old stock, potential seismic risk 132
8.3 Inadequate housing for poor and vulnerable groups 133
8.4 Limited reach of national government initiatives 137
RECOMMENDATIONS 143
9.1 Housing Policy: Fundamental Principles 143
9.2 Housing market 144
9.3 Old Socialist era housing stock 152
9.4 Low income and vulnerable groups 154
9.5 Social housing 157
9.6 Legal and Institutional Framework 160

References 164

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List of figures

Figure (i): Population growth from 2001-2013
Figure (ii): National housing surplus
Figure (iii): Housing surplus as a percentage of district housing stock compared to district population as
percentage of national population
Figure (iv): Overcrowding rate by degree of urbanization
Figure (v): Number of housing units by construction materials and period of construction
Figure (vi): Bulgaria Real House Price Index
Figure (vii): Annual average market prices of dwellings in district centers
Figure (viii): Functional housing market: Roles of public and private sector stakeholders
Figure 1.1: The Housing Value Chain
Figure 2.1: Population growth from 2001-2013
Figure 2.2: Number of households by residence and census year
Figure 2.3: Percentage change in district population from 2001 to 2011
Figure 2.4: Classification of Bulgarian cities according to growth/decline in population and economic activity
Figure 2.5: Change in Population between 1990 and 2015 as percent of total change
Figure 3.1: National housing surplus
Figure 3.2: Housing surplus in selected districts and Sofia as percent of contemporary existing stock
Figure3.3: Housing surplus as a percentage of district housing stock compared to district population as
percentage of national population
Figure 3.4: Distribution of population by tenure status, 2014
Figure 3.5. Overcrowding rate by degree of urbanization
Figure 3.6: Number of housing units by construction materials and period of construction
Figure 5.1: Poverty rates according to ethnic groups, 2015
Figure 5.2: Share of poor between ethnic group by economic activity, 2015
Figure 5.3: Population at-risk-of-poverty or social exclusion by ethnic groups, 2015
Figure 5.4: Poverty rate and thresholds at the district level, 2015
Figure 6.1: Bulgaria Real House Price Index
Figure 6.2: Percent change in HPI from Q1 2015 to Q1 2016
Figure 6.3: Annual average market prices of dwellings in district centers
Figure 6.4: Breakdown of selling price
Figure 6.5: Bulgaria residential building permits
Figure 6.6: Deposit interest rate in Bulgaria
Figure 7.1 (a): Affordability of unit purchase in Sofia
Figure 7.1 (b): Upfront costs of purchase in Sofia in terms of months of income, by NSI income deciles
Figure 7.2 (a): Affordability for old unit purchase in Blagoevgrad
Figure 7.2 (b): Upfront costs of purchase in Blagoevgrad in terms of months of income
Figure 7.3 (a): Affordability for old unit purchase in Montana
Figure 7.3 (b): Upfront costs of purchase in Montana in terms of months of income
Figure 7.4 (a): Affordability for old unit purchase in Pleven
Figure 7.4 (b): Upfront costs of purchase in Pleven in terms of months of income
Figure 7.5: Affordability of Rental
Figure 9.1: Functional housing market: Roles of public and private sector stakeholders
Figure 9.2: Housing co-operatives offer a midpoint between public and private housing

List of tables

Table (i): Vacant dwelling units in Bulgaria, 2011
Table 2.1: Population statistics by district
Table 2.2: Population development over time in the four cases study cities
Table 3.1: Dwelling units by district, 2011
Table 3.2: Vacant dwelling units in Bulgaria, 2011
Table 3.3: Vacancy rate at district level, 2011
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Table 3.4: Discrepancy between dwelling unit surplus and vacant dwellings, 2011
Table 3.5: Newly built dwelling units by municipalities
Table 3.6: Tenure status in % of the population according to income and type of household, 2015
Table 3.7: Dwelling units by mode of habitation, 2011
Table 3.8: Overcrowding rate (%) for tenants versus owners in Bulgaria and in EU-28, 2015
Table 3.9: Overcrowding rate (%) in Bulgaria and in EU-28, 2015
Table 4.1: Integrated actions for sustainable urban development – indicative amounts of ERDF and ESF support
Table 4.2: Social welfare subsidies related to housing
Table 4.3: Maximum income and coefficients for receiving monthly monetary subsidy and targeted assistance
for heating
Table 4.4: Construction and Building Permitting Process in Bulgaria
Table 4.5: Illustrative cost and duration of permitting process for residential buildings by category
Table 4.6: Stages in the purchase and sale of property
Table 5.1: Material deprivation items by ethnic group, 2015
Table 5.2: Place of residence of the large ethnic communities (%)
Table 5.3: Development indicators for Roma in EU-11 and Bulgaria
Table 5.4: Development Indicators comparing Roma and non-Roma
Table 5.5: Monthly expenditure (as a share of total expenditure)
Table 5.6 Outstanding payments (share of people)
Table 5.7 Sources of energy for Roma and non-Roma households
Table 5.8: Building legalization and Tolerance Certificates
Table 5.9: Dwelling ownership rate
Table 6.1: Nominal House Price Indices for Bulgaria, Sofia, Varna, and Plovdiv
Table 6.2: Ballpark house price range to different income segments in Sofia
Table 6.3 Housing market trends/indicators (2006-2016)
Table 6.4: Indicators for residential lending
Table 7.1: Housing cost overburden threshold by income quintile
Table 7.2: Housing Cost Overburden Rate
Table 7.3: Housing Cost Overburden Rate in 2015 by Income Quintile
Table 7.4: Monthly household income by decile (BGN), 2015
Table 7.5: Household income categorization used by developers in Sofia
Table 7.6: Share of Household Expenditure
Table 7.7: Square meter prices for old units (outside of Sofia) and new units
Table 7.8: Income deciles (2015) and housing cost overburden thresholds
Table 7.9 Square meters of old construction affordable to different decile groups with a standard mortgage
loan
Table 7.10: Maximum square meter price affordable for a 50 m2 old unit using a standard mortgage loan
Table 7.11: Years of savings needed in order to self-finance a 50 m2 house in different cities
Table 8.1: Vacant housing units in Bulgaria, 2011
Table 9.1: General framework for the roles of public and private counterparts in housing PPPs
Table 9.2: Typical components in a housing PPP
Table 9.3: Illustrative subsidy amounts for rental vouchers

List of boxes

Box 3.1 Disaster Risk in Bulgaria
Box 3.2: Contents of a Technical Passport
Box 4.1: Housing for disabled people in Sofia
Box 5.1: Tensions between local authorities and the Roma
Box 6.1: Student accommodations: Interviews
Box 8.1: Requirements for proof of address
Box 8.2: Blagoevgrad: National Program for Energy Efficiency
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Box 9.1: Examples of housing databases in other countries and regions
Box 9.2: Cooperative Housing and Housing Associations
Box 9.3: Kazakhstan: Housing Allowance Program
Box 9.4: Decent Homes Standard, UK

List of plates

Plate (i): Panel buildings
Plate (ii): Roma settlement in Sofia
Plate (iii): Residential buildings in Blagoevgrad retrofitted under NEEP
Plate 3.1: Panel buildings
Plate 4.1: Renovated panel buildings in Blagoevgrad
Plate 4.2: Municipal housing in the Roma neighborhoods in Sofia
Plate 4.3: Newly constructed Category 1 social housing in Dupnitsa
Plate 5.1: Roma settlement in Fakulteta, Sofia
Plate 5.2: Roma settlement in Filipovtsi, Sofia
Plate 5.3: Roma settlement in Hristo Botev, Sofia
Plate 5.4: Households in low income settlements use stoves fueled with coal or wood for heating and cooking
Plate 8.1: “Panel” building in Blagoevgrad
Plate 8.2: Individual electricity meters perched in boxes on top of electricity poles
Plate 8.3: New Social housing project in Dupnitsa

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Acronyms and Abbreviations

AP Action Plan
ASA Advisory Services and Analytics
BDB Bulgarian Development Bank
BGN Bulgarian Lev (currency code)
BOT Build Operate Transfer
CA Commerce Act
CPF Country Partnership Framework
CSD Center for the Study of Democracy
DA Development Agreement
EC European Commission
ECA Europe and Central Asia
ECD Early Childhood Development
EE Energy efficiency
ESAs Energy service agreements
ESCO Energy Service Company
EU European Union
EU-SILC EU Statistics on Income and Living Conditions
EUR Euro (currency code)
FSU Former Soviet Union
GDP Gross Domestic Product
GFDRR Global Facility for Disaster Risk Reduction
GOB Government of Bulgaria
HBS Household Budget Survey
HH Household
HHSRS Housing Health and Safety Rating System
HOAs Homeowners’ Associations
KZT Kazakhstani Tenge (currency code)
LCOM Law on the Condominium Ownership Management
LRONREP Law on Restitution of the Ownership over Nationalized Real Estate Properties
LTV Loan to Value Ratio
MPA Municipal Property Act
MPCA Mortgages for Immovable Property of the Consumers Act
MRDPW Ministry of Regional development and Public Works
NEEP National Program for Energy Efficiency of Residential Buildings
NGO Non-Governmental Organization
NPL Non-Performing Loan Rate
NSDC National Spatial Development Concept
NSI National Statistical Institute
OA Ownership Act
OCA Obligations and Contracts Act
OPHRD “Human Resources Development” Operational Program
OPRG Operational Program "Regions in Growth"
OSI Open Society Institute
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