Dates:
June 16-17, 2023
Average prices for new housing in Kyiv stopped at UAH 33,000 per square meter. What is going on in the market?
Average housing prices in new buildings in Kyiv in October stopped rising at UAH 33,000 per square meter – such data are indicated in the monthly report of the LUN service.
What will happen in the market and whether housing will become cheaper – find the answers in the analysis
Already at the peak
According to the LUN service data the prices increased during eight months. In September they reached UAH 33,000 per square meter. This is 22.2% higher than a year ago (UAH 27,000/sq. m.).
In October, prices increased significantly in one area: in Pechersk district (66,100 UAH/sq.m., + 5.6% per month).
According to the LUN service in the Podilskyi district, housing in newly built buildings, on the contrary, fell in price (UAH 37,700/sq.m., -8.5% per month).
During the month, economy and comfort class housing fell in price insignificantly. However, premium real estate "fell" by 4% (73,800 UAH/sq. m.). Business class housing rose in price by 2.5% (UAH 50,600/sq. m.)
At the same time, prices were actively rising in the suburbs of Kyiv city. In this segment, the most expensive housing was in Vyshneve city (UAH 24,000/sq. m., + 4.3%) and in Vyshhorod city (UAH 23,000/sq. m., + 4%).
Why the prices have stopped
The peak demand season has shifted
Roman Gerasymchuk, the director of the City Development Solutions consulting company, explained that previously the peak season of demand for real estate was in September-October. Over the last two years it fell on in August-September.
Yurii Pita, the head of the Association of Realtors, added that it was during these months that the deferred demand started in the spring of 2021, when strict quarantine restrictions were introduced. Therefore, there was a burst of activity in the market, but it naturally declined in October, added Pita.
Strengthening the UAH exchange rate
Many property developers still maintain domestic pricing in USD, explains Gerasymchuk. He also said that due to the strengthening of the UAH exchange rate in October (from UAH 26.61/$ to UAH 26.27/$ in the period from October 1 to November 1), prices remained steady.
Closure
Gerasymchuk assumes that the introduction of a lockdown could force potential real estate purchasers to postpone the purchase of housing and wait through the first month of strict quarantine. According to him, such purchasers can expect lower prices, as it was during previous lockdowns.
In particular, by the end of the year they can start selling the remains of apartment and less liquid apartments with discounts, added he.
A number of other reasons were named by the press service of Kyivmiskbud with reference to the company's president Igor Kushnir. Since the beginning of the year, prices for construction materials have risen, the KMB assures. The representatives of the company added that newly built housing became more expensive due to inflation.
What shall we expect next?
Property developers hope that this is not the end of the rally.
Kushnir from Kyivmiskbud assures that the demand for residential real estate since the summer remains consistently high.
"I believe that it's too early to talk about stopping growth. Prices are stable at present. But this does not mean that in case of the rise in price of building materials, they will remain at the same level. We will be forced to raise the price of apartments", - said Kushnir.
Yurii Pita, the head of the Association of Realtors, believes that by the end of the year and in January, prices will be stable. He added that insignificant growth in cheap segments is possible.
"We can see a balance between supply and demand. Growth (in price - Ed.) is not basically expected, – Pita said. – The purchaser has satisfied his needs, and a new one (purchaser - Ed.) has not yet arrived".
Gerasymchuk from City Development Solutions assumes that housing prices will remain stable or increase slightly in November. According to him, the real increase may begin in December, because this month is the second peak of real estate transactions.
Why exactly December? Gerasymchuk explains that this is partly due to market discounts and New Year's gifts in the form of apartments. He also added that some of the agreements that were supposed to take place in January are postponed to December due to holidays.
By the end of the year, at least in January, prices per square meter in new buildings may add 3-5% (UAH 33,990 - UAH 34,650), assumes Gerasymchuk.
There is an important peculiarity – for now there is no data on the number of agreements concluded in October, says Gerasymchuk.
Price increases are unlikely to happen without expansion in demand.