Prices for apartments in new buildings in 2022 will shoot up by another 15%—developers’ forecasts

Author

Lesia Solovchuk

In 2022, the cost of housing in new buildings may increase by 10-15%. However, the market will be able to achieve this only under favorable economic conditions and a significant increase in demand.

The largest price fluctuations in the primary market are possible in two periods—from April to June and from October to December, inclusively, Mykhailo Pidvysotskyi, founder and managing partner of Concept Group, notes in a commentary to .

Starting in spring of the next year, a significant increase in demand is expected for housing in new residential complexes. However, the specialist notes, the buyers' interest will be focused mainly on objects of high comfort classes.

So, given a favorable political and economic situation in the country, prices in the market will increase by 10-15% in 2022. The specialist stresses that the price rise will be motivated by increased popularity among buyers only in 30-40% of new buildings.

"In 2022, more than 60-65% of demand in the primary market will be concentrated on 1-, 2-room apartments with an area of up to 60 sq. m exactly in comfort and comfort + class properties that are characterized by high quality construction, and the creation of a full-fledged infrastructure complex is also envisaged," Mykhailo Pidvysotskyi says.

According to Volodymyr Danylenko, the founder of the company M4U and the Chief Commercial Officer at SAGA Development, in the past two years we have seen a significant imbalance in supply and demand in the market that, together with the cost development, pushes up the price per square meter.

In 2022, the supply will tend to catch up with demand.

"Due to the fact that the prices are growing faster than the purchasing power, the demand will gradually decrease. At the same time, the total annualized value of sold assets is likely to continue to increase, although not as actively as before. As a result, we will come to the conclusion that by the end of 2022 the figures will return to the level of 2019: the sales rate will decrease from 68-70% to 40-45%, and the annual price rise will be 11-13" the representative of the development company believes.

What will impact prices?

The price situation in the market for new buildings, according to the expert, will depend on the rate of mortgage lending development and the effectiveness of legislative changes in the field of urban planning that should guarantee buyers a safe purchase of housing.

To significantly increase the demand for apartments in new housing estates, the share of transactions concluded with the help of mortgages should increase to 25-30% of the total sales in the primary housing market, Pidvysotskyi believes.

By the end of 9 months of 2021, the primary market accounted for only about 0.5% of the mortgage transactions in the housing market, and under the program Affordable Mortgage, just over 20% related to the purchase of housing in new buildings.

"The development of mortgage and legislative regulation of the primary market are the interconnected processes. After all, this refers not only to the mortgage availability for the citizens, but also to making the mortgage work on the "safe" primary market," the expert notes.

Under the optimistic scenario, in the coming years, the number of mortgage loans granted for the purchase of housing in the primary market may amount to 40-50% of the total volume of mortgages, and that could cause a new housing boom, Pidvysotskyi stresses.