Only in late 2017 – early 2018, the hryvnia began to fall, many managers of construction companies talking about a possible increase in prices for primary housing. It was possible to hear even a very high figure to 10-15% in the first half. And should we really expect growth?
This is a serious prediction, especially considering that in the first half of December 2017, market experts, and honest heads of construction companies, especially from the regions, complained that it has become much harder to sell your square footage inform Economic news.
Recall, the cost of housing in the primary market in Ukraine today is: smart housing (small area of 20 to 30 square g) – 320-350 $/m2), economy-housing – 300-650 $/m2 housing business-class – 700-1200 $/m2, housing premium – 1500-2500 $/m2.
Some managers of construction companies complain that due to the cheapening of the hryvnia significantly increased (or will increase) the construction materials and designs that buying enterprises that build housing for imports.
As stated by the Deputy General Director for development and marketing "TMM" Alex Govorun, pricing in the real estate market depends on the balance of supply and demand than from currency fluctuations: "If we take into account the prices, numerous promotions and also real prices of transactions in 2017, we see that the rise in prices as the trend is not. Most likely, the average price in 2018 will remain at the same level."
I quite agree with him Director of the project company "AIMM GROUP", architect Anna Iskierdo, which, however, notes that the rise of the dollar and the Euro relative to the hryvnia really contributes to a specific increase in rise in cost of construction per square meters of new housing: "But talk about a significant growth of prices should be regarded as a provocation, or premature panic. They are really able to influence in the short run, the price of new housing, but the market will play these panic only in the second and third quarters of this year." Experts believe that the rapid growth of cost of square meters of housing does not have to wait, because there are no objective economic indicators.
According to company executives, KP “Zhitloinvestbud-UCB”, much more to the cost not affected by the exchange rate, and inflation of the hryvnia. "During the year, the hryvnia lost less than 4% against the dollar, and inflation in 2017 was almost 14%. Wages growth in prices for domestic goods and services, of course, pushing the cost of housing up," – noted there.
That's the thinking of market participants is quite useful and make up an overall picture of what is happening, and draw predictions for the coming months. That price growth for housing that is being built or already commissioned, even at 5%, do not have to wait, also the analyst believes the market Andrei Guselnikov. He noted that in the primary housing market now is overproduction, and this in their report even noted the analysts of the national Bank. "The dollar or the Euro, in principle, affect these processes only in the case if imported component of construction per square meter (in fact, the cost of building materials imported from other countries) is significant. But now developers are already not the first year for construction of housing used by 80-90% domestic materials. For the construction of smart housing and housing economy class use only domestic building materials and technology. So loudly that the housing is totally expensive and even on 10-15%, to put it mildly, not true. And this will not happen, because developers, especially in the regions, already faced with the problems of sales", – said the expert.
For his part, Alexei talker notes that the import component in the construction of economy class is around 10-15%, business class – 20-25%. "The main structural elements of the building can be 100% made from domestic materials. Concrete, metal constructions, gas and ceramic blocks, insulation, window design – all of this produce in Ukraine. The objects of the highest class are usually used imported materials and equipment – facade systems, elevators, engineering," he says.However, according to experts, still, the cost of construction per square meter has also indirect imported component. Thus, the cost of most building materials is dependent on energy prices, metals, which are often tied to the currency and have global stock market. And in fairness it should be noted that the share of this component in the cost of one square meter of housing, especially in the construction of affordable apartments, close to 3-5% at the most.
However, some managers of the construction companies are doing everything to prevent sagging of the primary housing market, especially in the capital. So, with the beginning of 2018, according to market experts, were the company who "quietly" withdrew from the sale of their apartments in a newly built or already commissioned homes.
The reason is that, first, they take a wait – still hoping that the prices on the primary housing market, by some miracle, can grow, and then they will expose their square footage at a substantially greater value. Secondly, not so long ago the city declared the need for substantial renovation of Kiev – like, it is necessary to demolish obsolete Khrushchev.
Called the figure – in Kiev can order to live long up to 3 thousand homes. Of course, then the Metropolitan government will be obliged to relocate residents of new homes, and it's much push to work (and, of course, before the price increase) to real estate developers. This statement has the right to life, but the capital's architects have noted that the demolition of Khrushchev today is more strategic than tactical plan of the municipality. Accordingly, when this will happen is still unknown. Perhaps it will occur in stages over several years, but also unknown, from date of such changes.
Even more, some experts predict the primary real estate market in 2018 a significant subsidence. "Look at what is happening with the hryvnia exchange rate, if the drop will continue, the market situation will be very difficult, especially for developers. So, the price of "primary" can fall, and I probably would have said, Morne, about 10-15% of their growth, but about 10-15% of their possible drop until July," says the analyst of the market Vladimir Shumeyko.
However, according to Ms. Izquierdo, falling prices for primary housing in the capital region in the coming years will not be: "Can you explain it in great demand, after all, is going to Kyiv a lot of people from the province, the number of inhabitants in the capital could significantly in the coming years to increase, even double. Therefore, the demand will grow from year to year. Popular also become satellite cities of Kiev, where the erect the housing, no worse in quality than in the capital."
It should be noted that the primary market has become a buyer's market, not the seller. The first dictates real estate prices. And if the buyer will have enough cash for its acquisition, real estate developers will be forced to reduce the prices of their square footage, while remaining at a very low profitability. At least the housing that they have already built and which can't sell.
But in KP “Zhitloinvestbud-UCB” I think, because in recent years Ukraine has significantly simplified obtaining construction permits, therefore, the market supply increased. "At the same time we are seeing stable and even growing demand for housing from enterprises with extensive experience, municipal or state ownership. Buyers are looking not only for attractive price, but also ensure that their housing will be completed and put into operation without problems. The company recently entered the market, such trust to did not, therefore, often practice dumping. Also alarming is the growing number of unfinished projects when the company cannot meet its obligations to investors."
Author: Anton Gorokhov
This is a serious prediction, especially considering that in the first half of December 2017, market experts, and honest heads of construction companies, especially from the regions, complained that it has become much harder to sell your square footage inform Economic news.
Recall, the cost of housing in the primary market in Ukraine today is: smart housing (small area of 20 to 30 square g) – 320-350 $/m2), economy-housing – 300-650 $/m2 housing business-class – 700-1200 $/m2, housing premium – 1500-2500 $/m2.
Some managers of construction companies complain that due to the cheapening of the hryvnia significantly increased (or will increase) the construction materials and designs that buying enterprises that build housing for imports.
As stated by the Deputy General Director for development and marketing "TMM" Alex Govorun, pricing in the real estate market depends on the balance of supply and demand than from currency fluctuations: "If we take into account the prices, numerous promotions and also real prices of transactions in 2017, we see that the rise in prices as the trend is not. Most likely, the average price in 2018 will remain at the same level."
I quite agree with him Director of the project company "AIMM GROUP", architect Anna Iskierdo, which, however, notes that the rise of the dollar and the Euro relative to the hryvnia really contributes to a specific increase in rise in cost of construction per square meters of new housing: "But talk about a significant growth of prices should be regarded as a provocation, or premature panic. They are really able to influence in the short run, the price of new housing, but the market will play these panic only in the second and third quarters of this year." Experts believe that the rapid growth of cost of square meters of housing does not have to wait, because there are no objective economic indicators.
According to company executives, KP “Zhitloinvestbud-UCB”, much more to the cost not affected by the exchange rate, and inflation of the hryvnia. "During the year, the hryvnia lost less than 4% against the dollar, and inflation in 2017 was almost 14%. Wages growth in prices for domestic goods and services, of course, pushing the cost of housing up," – noted there.
That's the thinking of market participants is quite useful and make up an overall picture of what is happening, and draw predictions for the coming months. That price growth for housing that is being built or already commissioned, even at 5%, do not have to wait, also the analyst believes the market Andrei Guselnikov. He noted that in the primary housing market now is overproduction, and this in their report even noted the analysts of the national Bank. "The dollar or the Euro, in principle, affect these processes only in the case if imported component of construction per square meter (in fact, the cost of building materials imported from other countries) is significant. But now developers are already not the first year for construction of housing used by 80-90% domestic materials. For the construction of smart housing and housing economy class use only domestic building materials and technology. So loudly that the housing is totally expensive and even on 10-15%, to put it mildly, not true. And this will not happen, because developers, especially in the regions, already faced with the problems of sales", – said the expert.
For his part, Alexei talker notes that the import component in the construction of economy class is around 10-15%, business class – 20-25%. "The main structural elements of the building can be 100% made from domestic materials. Concrete, metal constructions, gas and ceramic blocks, insulation, window design – all of this produce in Ukraine. The objects of the highest class are usually used imported materials and equipment – facade systems, elevators, engineering," he says.However, according to experts, still, the cost of construction per square meter has also indirect imported component. Thus, the cost of most building materials is dependent on energy prices, metals, which are often tied to the currency and have global stock market. And in fairness it should be noted that the share of this component in the cost of one square meter of housing, especially in the construction of affordable apartments, close to 3-5% at the most.
However, some managers of the construction companies are doing everything to prevent sagging of the primary housing market, especially in the capital. So, with the beginning of 2018, according to market experts, were the company who "quietly" withdrew from the sale of their apartments in a newly built or already commissioned homes.
The reason is that, first, they take a wait – still hoping that the prices on the primary housing market, by some miracle, can grow, and then they will expose their square footage at a substantially greater value. Secondly, not so long ago the city declared the need for substantial renovation of Kiev – like, it is necessary to demolish obsolete Khrushchev.
Called the figure – in Kiev can order to live long up to 3 thousand homes. Of course, then the Metropolitan government will be obliged to relocate residents of new homes, and it's much push to work (and, of course, before the price increase) to real estate developers. This statement has the right to life, but the capital's architects have noted that the demolition of Khrushchev today is more strategic than tactical plan of the municipality. Accordingly, when this will happen is still unknown. Perhaps it will occur in stages over several years, but also unknown, from date of such changes.
Even more, some experts predict the primary real estate market in 2018 a significant subsidence. "Look at what is happening with the hryvnia exchange rate, if the drop will continue, the market situation will be very difficult, especially for developers. So, the price of "primary" can fall, and I probably would have said, Morne, about 10-15% of their growth, but about 10-15% of their possible drop until July," says the analyst of the market Vladimir Shumeyko.
However, according to Ms. Izquierdo, falling prices for primary housing in the capital region in the coming years will not be: "Can you explain it in great demand, after all, is going to Kyiv a lot of people from the province, the number of inhabitants in the capital could significantly in the coming years to increase, even double. Therefore, the demand will grow from year to year. Popular also become satellite cities of Kiev, where the erect the housing, no worse in quality than in the capital."
It should be noted that the primary market has become a buyer's market, not the seller. The first dictates real estate prices. And if the buyer will have enough cash for its acquisition, real estate developers will be forced to reduce the prices of their square footage, while remaining at a very low profitability. At least the housing that they have already built and which can't sell.
But in KP “Zhitloinvestbud-UCB” I think, because in recent years Ukraine has significantly simplified obtaining construction permits, therefore, the market supply increased. "At the same time we are seeing stable and even growing demand for housing from enterprises with extensive experience, municipal or state ownership. Buyers are looking not only for attractive price, but also ensure that their housing will be completed and put into operation without problems. The company recently entered the market, such trust to did not, therefore, often practice dumping. Also alarming is the growing number of unfinished projects when the company cannot meet its obligations to investors."
Author: Anton Gorokhov