Review of the secondary real estate of Kiev in the 1 st quarter





12.04.2011 14:29
Real Estate Market Analysis | Review of the secondary real estate of Kiev in the 1 st quarter

The index of housing costs in Kiev IKm (USD) fell 1.2% to 1,502 points index the cost of housing in Kiev IKm (UAH) decreased by 1.3% to 11,949 points index price expectations (the expected change in value index of the next month) -1 2% Index return home (compared with bank deposits) -0.4 Bank Dep.

In March, the cost of the Kiev real estate has continued to decline; business activity varied from week to week. The number of calls, views and inclinations is markedly reduced, again increasing.

The main reason for these fluctuations in business activity - to change the expectations of market participants. Apparently, the buyers and sellers in different ways about the prospects of the domestic economy, as well as possible scenarios of the Kiev real estate market. Of the variety of factors, estimates and identify those that meet their aspirations.

Sellers reduce prices rather reluctantly. Probably, many of them listened to the words of senior officials that the Ukrainian economy is gradually improving. It is - with one hand. On the other hand, the negative information coming from all over the world, often regarded as an argument in favor of the Kiev real estate. Mol, afraid to change an apartment on the package with the dollar when the world is going on ... And what if the dollar does not stand all these trials and collapse?

Customers (a large of its mass) tend to focus on the negative for the country and its economy scenario. The index of consumer sentiment seems to have fallen markedly. Many believe forecasts of possible default, the impending eviction indebted mortgage holders of the secured apartments, a sharp rise in unemployment and, as a consequence of all this, the collapse of Kiev's real estate prices.

In particular, it is from this point of view the events in the Arab world (say, the Ukrainian economy is too dependent on imported oil and gas price increase which might lead to the collapse of many industries).

From the same position is considered natural and manmade disasters in Japan. Supporters of the collapse in property prices in Kiev are inclined to believe that the consequences will be severe. In particular, there are serious concerns about the freezing of credit promised by Japan at U.S. $ 2 billion under 1.5% per annum for the construction of subways at Troieschyna. If this happens, if interest rates will be increased, but the beginning of credit will be tightened, then to Kiev and the Kiev it is a big blow. But where a big hit can be an outflow of Japanese capital from the economies of many countries as a consequence, decrease the stability of their banking systems and the possible repetition of the recent global financial crisis.

Contribute to the change in market sentiment has made the entry into force of the law "On Enforcement Proceedings," which substantially expanded the rights of creditors and executive services for the implementation of pledges. The banks appeared effective mechanism of pressure on the indebted mortgage holders, and this may well lead not only to increase the number of apartments on the mortgage market, but also implement them at prices that are significantly below market. Apparently, customers at a very calculated, and many considerably hardened its position in the negotiations and auctions.

While mortgage flats exposed at a large discount on the real estate market in Kiev is not visible. Obviously, banks have been slow to use the mechanisms available to them to implement a pledge of real estate, knowing that their practical application of a mass not only to sharply increase social tensions, but also devalue the mortgages. And, therefore, will hit the banks and the banking system.

According to our data, the March sales prices were on average 14.3% below the average prices of the proposals in their respective market segments. How true these data reflect a trend obscherynochnye - hard to say. First, in every market its own characteristics, its supply and demand. Second, these data were obtained on the basis of a very small number of transactions (hence, the statistical error is high). Thirdly, most of the objects sold are flat, the state which differs significantly (in either direction) from "average". And although when comparing prices, we use not only a public service evaluation of apartments, but also appropriate methods to take into account the state of housing, such a variety of options is also a source of errors and inaccuracies.

If the outcome of the March move to end the first quarter, then we can fairly confidently say about the trends of recovery of the Kiev real estate market. Impossibly high for the vast majority of citizens of Ukraine prices fell in almost all its segments.

Indices of cost of housing in Kiev IKm (USD) and IKm (UAH) in the first quarter declined by 2,8% and 3,2%

Business activity from month to month grew. While in March the market place rather complex and contradictory processes, which we discussed above, but in these conditions the overall results of the month are positive: in comparison with February the number of transactions increased.

Increased turnover of the market, the list of transactions has considerably increased the share of expensive facilities. " Looks like buyers of expensive apartments and houses have come to the conclusion that prices have fallen so much that it is time to act. In particular, good demand and two bedroom apartments in the prestigious brick houses in the area Obolonska embankment, where the cost per square meter often exceeds $ 3000.

Banks are quite active in promoting their mortgage programs, and in some cases, bringing in realtors. The results are still quite modest, but they are. In the list of transactions increased the number of flats bought with mortgage loans. Mostly it is a relatively small amount that buyers are added to existing savings. But there were also purchases mortgage flats with updating large enough credits to new owners.

In the list of transactions increased significantly bundle of apartments depending on the quality of repairs. We believe that this is not accidental. Choosing a sufficiently large and each buyer could not hurrying to pick up Taipalsaari and material possibilities. As a result, some have purchased an apartment with quality repair and even furniture, especially not overpaying for them, others felt that more profitable to purchase "killed" the apartment, and make it repairs to your liking.

So it's not as bad as they say, many members of Internet forums: interest in Kiev and its real estate is a (an appreciable part of buyers - foreign nationals). Another thing is that the number of transactions and turnover of the market now are not the ones that were several years ago.

In the first quarter on the site www.domik.net were held two contests index changes cost projections. In fact, this unique public opinion polls, which permit investigating the change in attitudes of actual and potential market participants. Opinions, as always, very different. Nevertheless, the spread of forecasts at this time is considerably less than in 2009 and 2010. Generalized (average) forecast 165 participants of the first competition the following: an index of home prices in Kiev IKm (USD) for the first half of 2011 will decrease by 7.8% to 1,426.6 points. Generalized (average) forecast 125 participants of the second contest: the index of home prices in Kiev IKm (USD) during 2011 will decrease by 14.6% to 1,321.1 points.

How these predictions will be correct - we learn, respectively, in early July 2011 and in early January 2012.

Graphs of the indices of the cost of housing in Kiev provided below.

 

 

Indices of cost of housing in Kiev are calculated based on actual database of real estate portal real estate www.domik.net (that is, on the basis of price offers), but take into account the sale price and the size of trades, as well as the dynamics of their change in prior periods. In this price information is given either in dollars per square meter, or in UAH per square meter.

In determining the indices used mathematical methods of approximation, which, while delaying the transition process but allow smooth curves and highlight the trend (the main dependence of price changes).

Unlike forms of the curves on the graphs of the indices IKm (USD) and IKm (UAH) due to currency fluctuations that took place in a particular month.

The selling prices in dollars for an apartment at 01/04/2011

Район

The number of objects *

 

Prices from-to

($ per apartment)

 

Median price ($ per apartment)

Price statistics for proposals ($ per apartment)

Golosiivskiy

2404

38000 - 430000

102701

114975

Darnitskiy

1505

37000 - 255000

91811

79806

Desnyanskiy

1630

40000 - 550000

97310

96774


Dneprovskiy

1684

32600 - 1900000

114292

159166

Obolonskyi

975

49000 - 1000000

109852

209833


Pechersky

688

42000 - 1500000

102991

124551

Podolsky

1260

35500 - 465000

94052

97723

Svyatoshinsky

1435

37000 - 420000

98761

115159

Solomensky

1722

38000 - 1575000

109453

174661


Shevchenkovskiy

2404

38000 - 430000

102701

114975

House type

The number of objects *

 

Prices from-to

($ per apartment)

 

Median price ($ per apartment)

Price statistics for proposals ($ per apartment)

Prerevolutionary

468

65000 - 1500000

132619

265843

Stalinka

815

46000 - 500000

111776

180116

Old Panel

2087

36000 - 560000

91773

82330

Typical panel

1527

42000 - 650000

99440

91923

Improved types of panels

843

45000 - 230000

110987

102430

Old Brick

2605

32600 - 315000

80575

83288

Superior Brick

823

41000 - 467500

109126

139669

Ukrainian panel

1323

51500 - 409860

98192

108272

Ukrainian Brick

3244

43000 - 1500000

114713

195267

Types of apartments

The number of objects *

 

Prices from-to

($ per apartment)

 

Median price ($ per apartment)

Price statistics for proposals ($ per apartment)

Gostinka

349

32600 - 75000

50000

50037

One room

4194

40800 - 180000

65000

74032

Doubles

4695

46000 - 310000

94820

113793

Three rooms

3957

60000 - 445000

134341

163684

Four

583

140000 - 775000

250955

359319

Five-room

80

250000 - 1300000

484098

678609


* We took into account only the objects, the price proposals which were included in the confidence interval in a particular market segment

Analyzing the data presented in these tables, it is necessary to bear in mind that in early 2011, we changed the methodology for the formation of the samples used in the calculations.

The main innovations are: tightening the rules of selection of objects involved in the definition of statistics; while expanding the number of information sources. In particular, in determining the statistics were used suggestions made in the section "Announcements" real estate portal www.domik.net (before such proposals are not included). As a result, the sample size increased significantly (and this reduced the statistical error). But it is more complicated screening ads containing false information. In addition, changes in methods of formation of the analyzed samples is associated with transient, difficult to compare statistics for different periods. Because until the transients associated with changes in methodology, we have decided to waive such a comparison.

Forecast for April 2011


We believe that in April the price will gradually decline in virtually all market segments. Rate of decline of the index value of the property Kiev IKw (USD) will be at the level of 0,3% in the week.

Preconditions for growth in the value of real estate of Kiev is now unavailable. Mortgage malodostupna for the majority of our citizens are not interested; streams of rich foreign buyers are not there, the mood of our citizens, to put it mildly, far from rosy.

But the dramatic collapse in prices so far is unlikely. Banks behaving very loyal to troubled borrowers, often helping them to sell the mortgage on an apartment rather high prices. And this gives us grounds to assert that the mass release of apartments on the market at a large discount in the near future will not be.

More difficult to provide a substantiated forecast of business activity. On the one hand, April - a month when activity usually increases: the market participants seek to resolve their housing and financial problems before the summer holidays, there are new buyers and sellers (including suburban real estate). On the other hand, the fluctuations in business activity, which were in March, may be continued and even the development in April.

However, the trend of previous months, give grounds to assume that the demand for modern high-quality housing will be. Especially where the sellers are willing to concede.

As for the low-quality housing, it will be claimed only in the case of very significant concessions to the sellers.

More detailed consultation at (044) 537-77-77

Information-analytical department of real estate portal www.domik.net

Author: Vladimir Kolomeiko

 


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