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What is going to happen to prices for new buildings in Kyiv by year-end

Victoria Bereshchak
real estate market columnist
Photo: Free-Photos / Pixabay

Photo: Free-Photos / Pixabay

The average cost per square meter in new buildings in Kyiv keeps increasing, although not so noticeably: at the end of the month, we see 1.5% growth in hryvnia and 2.5% in dollars.

By the end of the year, it is likely that, given the continuing rise in prices for building materials and the situation in the global energy market that affects the state of the economy, a few more percent of increase awaits us, and then a slight lull in price dynamics.

The prime cost of construction is increasing, and today only a player with the last hope of attracting a buyer through price dumping will decide to build at a loss.

But those who build liquid projects and demonstrate normal dynamics on the sites are unlikely to commit economic suicide. There are no prerequisites for a significant reduction in prices yet.

At the moment, since the beginning of the year, the average price of a square has increased by 19% in hryvnia and by 27% in dollars. Despite the fact that the growth in the "comfort +" category averaged 25-35%, and in the business class—from 30 to 40%.

Two reasons at once fostered this—the increase in the cost of building materials, when the prices for certain items doubled, as well as the increasing investment demand due to falling rates on deposits and an unstable economic situation.

Much more Ukrainians have made up their mind to fix money in concrete than last year. Hence the heated rush demand. However, only for certain formats and locations.

At the moment, investment demand, based on my observations, has already gradually exhausted itself. The number of transactions dropped by an average of 25% already in September. The decrease, according to developers, was in October as well.

It is likely that it is the limited resource of effective demand that will be the main deterrent to a noticeable price rise per square meter at the beginning of the year.

Until the end of 2021, the price rise for new buildings will remain within 2-4% per month. Then there will be a certain lull, and its duration will be determined by a number of market factors: the cost of building materials and construction and installation work, the dollar exchange rate that, according to the forecasts of financiers, will grow, the situation on the energy markets, and the overall situation in the country related to quarantine restrictions.

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