When the real estate market will reach «bottom»?

25.09.2010 17:50
Articles about real estate | When the real estate market will reach «bottom»? The real estate market as if frozen in anticipation of what will happen to him next. Still, the realtors and experts are divided into two warring factions: those who play on the rise, and those who believe that big "Ukrainian bubble" real estate will continue to rapidly deflate.

We do not undertake a foregone conclusion that in the next six months or even a year market (ie real estate prices and real demand) will rise considerably, or vice versa cool "prosyadet. Yet one thing is clear: the correction to the bottom continues unabated, the newspaper 2000.

Related article: House or apartment?

If you look at price changes over the last year in the major cities of Ukraine, will be obvious: with a different activity prices continue to nosedive. Most (at 7-18%), cost per square meter sags in the most economically developed regions, where it was recognized, the real estate prior to the crisis was the most overrated.

For instance, in Donetsk decline in home prices over the past year (since September - by September of this) has already exceeded 16%. Similar dynamics observed in one of the most expensive cost of housing city - Odessa. Almost the same thing we have in Luhansk, and Lviv, and even in Vinnitsa. Even more sharply prices tumbled in Zaporozhye and general record - in Kharkiv, where price "subsidence" has already exceeded 20%.

Slightly slower than the diving prices except in Kiev, which obviously can be attributed to its status as a capital, and yet more profound psychological shock to the owners of apartments that are still not used to the new realities. Fall, but still not as fast as in other metropolitan areas, prices in Dnepropetrovsk.

At the same time, slightly up over the past six months trying to jump the prices in most major cities - Nikolaev, Poltava, Sums, Uzhgorod, Kherson, Khmelnitsky, Chernigov. True, it is primarily concerned with the cheapest segment of housing - one-and two-bedroom apartments.

However, the main temperature indicator and you may say, driven real estate market in the country is Kiev. It spent the largest amount for the purchase of real estate market here is always the most active.

So, as of early September, the average cost per square meter second home in the capital is $ 1779 (statistics consulting company SV Development). If, however, proceed from the data of the declared prices of apartments offered for sale in the basis of the largest real estate agency in Kiev Blagovest (this company is estimated to control more than 2 / 3 of transactions on the capital market) - $ 2,467 per square meter. m

Already full-length studio apartment (not Gostinka ") in the capital can easily be purchased for $ 50-60 thousand, and even cheaper if the sellers really intend to sell. However, while this is far from metro areas.

Similar trends of falling prices specialists noted also in respect of non-residential real estate market - warehouse and office space. Prices in this segment are considered one of the most important indicators (to be exact - the precursors) of what will happen to prices in general, the market subsequently. If business activity is declining or just "lies", it means that soon a wave of thunder and private sector.

However, most dramatically, "subside" is now a market-town land and houses. In July the average sale price of 1 square. meters of private homes in the suburbs of Kiev was $ 1383. Compared with June, their value decreased by 1%, and since the beginning of the year - by 12,6%.

Two years ago, in early September 2008 (that is, somewhere before the official advent of the crisis in Ukraine), the average bid price of real estate capital has reached a historic peak - $ 3628 per sqm. m (Statistics "Blagovest" - about $ 4,205). So now the price of real estate of all types where a two times lower than before the crisis.

The main question today is how much it is or still not enough?

That hide the statistics?
The whole year 2009 the market of apartments and rooms for offices across the country and in the capital flew down swiftly, resulting in a mid-year was a record minimum number of sales transactions. So, in August last year in the capital was carried out only about a hundred and fifty transactions. Today that figure, according to the records of Realtors, significantly more. So, in August this year, according to SV Realty, in Kiev was concluded 707 transactions of the secondary housing (although in some months and meet the performance of about 400 transactions).

And yet, despite the fact that among realtors, even in times of crisis it was difficult to find those who would not have predicted the rapid and very rapid rise in prices, many of the symptoms of macroeconomic indicators and today they say: the market probably has not reached the "bottom".

Of course, prices have fallen and now half the pre-crisis, but every real buyer's market, as recognized by all, without exception, realtors, now account for at least 10 and even 20 proposals. It turns out that prices are still very inadequate to the realities and the market equilibrium has not yet been found.

Many analysts suggest that such an abnormal ratio of price to demand - a matter of time. To the owners of apartments psychologically come to terms with the idea that their property is worth twice or three times cheaper, and perhaps never will go up, as during the "bubble", they need a period of time. And also - the long absence of buyers.

Yes, since December of 2009 until March of this year on the market there has been some upward correction (obvious direct relationship with the presidential election - an attempt to speculate on expectations of rising prices after the change of government). Slight fluctuation also occurred in May and early summer. Overall, however, since the beginning of this year there is a slight, but quite a clear decline (the cost of real bargains when signing contracts, buying and selling, of course, has publicly declared lower prices).

According to the company Blagovest when in January this year, the average cost per square meter of housing in the capital, was $ 2639, then at the beginning of September it - somewhere below 7% ($ 2,467).

If you look at the situation closer retrospect, the trend of lower prices continues, although the number of transactions certainly significantly more than a year ago. So, if in August 2010, according to SV Development, in the capital signed 707 transactions in the secondary housing (this is by 7,9% less than the number of transactions in July 2010, what else can you explain a typical summer decline in activity), but now number of transactions is still a quarter higher than in August last year.

Moreover, in January-August, the secondary housing market in general, concluded 6405 transactions. And this is as much as 75,5% increase over the same period last year.

Growth takes place at "the primary." According to SV Realty, in this market in August, concluded 199 deals, though that on 5,7% below the figure for July 2010, but 38.2% higher than in August 2009 of the first. In January-August 1484 entered into these transactions - is on 80,8% more of the same length of time in 2009.

Consequently, the price "bottom" Go ahead and increase the activity of customers?

More skeptical analysts to say it like this: if we consider that almost the entire year 2009 price offer for sale remained high enough (ie completely inadequate even then the realities and almost no demand), we are now seeing only the first progress to a more adequate price. And buyers who waited for the sharp rush.

However, the Rubicon has not yet passed. After all, if we consider that the number of proposals on the order exceeds the existing demand, and many apartments are on sale for over a year (or simply removed from the market), the grounds for further downward correction is more than enough.

And indeed, today there are many predictions, indicating that another "sinking" of the market apartments can happen. Somewhere in the spring-summer 2011.

These forecasts are primarily based on the fact that in order to stabilize the property market there is not and is not expected for at least one of the key prerequisites for the growth of prices - cheap and affordable long-term loans.

Any sensible view of things to show that these loans should be at least at 10-12% pa in UAH, and for not less than 20 years. Hence, all that many credit card financial institutions in recent months naobyavlyali under the guise of new mortgage lending programs, wiser interpreted as a typical marketing and advertising moves, the goal of which - once again reminded of the work and even the progress of those or other banks.

Speculation for a fall
In the course of communication with buyers realtors, market operators, it is reasonable to recommend a hurry to buy real estate and, of course, predicting a speedy and rampant price growth.

On the one hand, realtors and "spur" sellers gradually reduce the cost of meters, to go to auction and give a discount because they are interested at least in some market movement. Wonderful argument for selling - hundreds of apartments, which are exposed for sale a year or more ago, but have little or no display.

On the other hand, those same Realtors are interested in a higher price deals to make more money (the average fee for service agency now slightly higher than the peak prices, and account for about 3,5-4% of the amount generally charged by the buyer, or mixed with the seller). They are certainly interested in the heating market expectations, the formation of citizens who still have free resources (or received them as a result of the sale of housing), a clear belief that the market is about to start to grow.

Statements about growth, supported by some local digital calculations of price fluctuations heard more often. That suggests the contrary is not very good anticipation. The fact that neither in the summary statistics themselves Realtors nor the macro-economic indicators, and even in current economic policy of the authorities, any stimulus to growth is not visible.

Moreover, a number of respected financial institutions, and analytical frameworks openly predicting the inevitable correction in prices and an ambulance. Thus, according to a recent analyst report German "Erste Bank", the secondary residential property market in Ukraine is inevitable tendency to decline, which will start ... in the early autumn.

The recent demand for residential property, which stabilized the market, analysts said the bank took place mainly at the expense of clients who have used their savings and filmed part of the amounts of deposits, assuming that housing prices have reached "bottom".

Now, however, the number of customers decreases with every transaction. Lack of affordable mortgages and declining real incomes, are the main reasons that recently pulled the market down again after the support caused by short-term demand, began to decline.

Their arguments analysts of Erste Bank is also supported by data that during the past two years, only about 10% of the buyers were able to pay the full purchase price immediately and without credit. All other transactions are conducted using loans.

Given the traditional summer stagnation in the market, "Erste Bank" expect that trend to a decrease in residential real estate, beginning with the early autumn, in 2011, would reduce the market for at least 20%.

The main reason for this decline is, according to the report, the lack of purchasing power and growing fears of citizens about the general no major expenses. When the price level as a result of the above-mentioned "blowing off" to satisfy demand, analysts of Erste Bank "forecast that the market will stabilize. The report indicated that if this happens, no sooner than 2012.

Similar forecasts also meet with other experts, credible. So, the president of the Union of Professional Real Estate (SSNU) Alexander Rubanov recently announced its forecast, according to which the housing market will stabilize no earlier than January-June 2012. According to him, the revival of demand can positively affect the resumption of mortgage lending, which according to most estimates will occur no earlier than 2 nd half of 2012. In this case, just say that this happens, it is within a specified time, too, is impossible.

Senior Financial Analyst, Credit-Rating "Roman Smakovsky generally recommended for those who have spare cash, do not rush into buying a meter in the next year - unless, of course, the apartment is bought for investment purposes and is not needed for housing. "In such circumstances, investment in the construction or purchase of housing with a view to resale or lease is economically inefficient," - says the expert.

According to him, "the short and medium term is more likely seen a gradual decline in prices, especially for obsolete housing."

As for the activation of the primary market, according to experts, developers have "should be offered as an affordable cost, and by the meter apartment, and the State in conjunction with industry representatives to form adequate mechanisms to guarantee the timely receipt of the citizens housing in exchange for investments in construction projects."

By the way, serious problems at construction companies who have frozen lines or significantly overdue in the surrender of many objects that do not add optimism to those in the same terms would be willing to invest in the housing. If developers such problems, it means that everyone expects the worst and they do not have the money. If the market prosyadet another couple of steps, what sense today to buy at today's inflated prices?

Many would say that the whole policy of the current government - from the actions of the National Bank to infrastructure projects, the Cabinet and even legislative and tax innovations - now directed specifically to the fact that with all sorts of real estate bubble away for good.

And even more, we dare suggest, would make an attempt to ensure that the cost of housing has continued to nosedive even further. In the end, housing at affordable prices - one of the basic theses of the presidential program, Viktor Yanukovych.

And indeed, from the standpoint of macroeconomic and financial balances, no qualitative growth can not be achieved unless the major share of free money people will continue to accumulate in their only real estate developers, speculators.

Among the president recently approved national projects, there is a program of mass construction of housing at a price of 3-4 thousand UAH. (Ie $ 400-500) per square meter. Today, we recall, the developers on average in Kiev put up the price three times higher (about $ 1542).

In principle, many specialists in our country have long known that $ 500 and today is the actual cost of housing, including all wiring and communications taxes. It is true without regard to the fact that current prices were originally laid down a very large expenditure on the costs of corruption, that is, bribes to officials.

It is believed that to run a large-scale construction of affordable housing sufficient to simplify the permitting system to receive such permits any interested developer, whether domestic or foreign. It's not necessarily going to build in prime locations, and even the current city limits, and on housing estates, which can be built from scratch, as his time in the same Troyeshchyna.

Our offers model for the formation of such housing is discussed further, but one thing is clear: it is enough to create a separate company with state participation, to begin to allocate the company free land, it is in return of 3-5% can go out and the price at $ 500 per square. Once it becomes clear that the market may start to be released en masse such apartments, all other companies will have to appease and their sverhappetity.

It is on this, obviously, is directed and has recently restarted the government program "Affordable Housing", which, though gradually, but may still be in the future more significantly affect demand.

They say also that the Cabinet seriously conceived to allow the Ukraine foreign construction companies that are now experiencing because of the crisis shortage of orders worldwide, will be ready to take the turnkey housing at prices close to the real cost - at $ 500-600 per sq. m. Thus, the construction market will not heat up the price boom, while more intense competition among developers.

If someone from the construction companies will go bankrupt in the process (by the way, is still in the country no major developer has not declared defaults, as almost all managed to roll over loans from banks, which, however, too long) - so forgive me developers better for the market. Mass housing negligent business banks will be sold for debts without excessive profits are accustomed to building monopolies.

The new draft Tax Code, despite the talk of the possible adoption and the tax on deposits, has already included the tax rate on "exceeding the limits of" meters of residential and commercial real estate.

Starting next year, note to pay for 10 UAH. tax for every extra meter, if in possession of the family has an apartment, or the cumulative number of meters in a few apartments - more than 100 square meters. m. According to statements by the Prime Mykola Azarov, it's not all.

The scale of the tax may soon make progressive. Simply put, at some point bought up massively wealthy citizens of square meters for the purpose of speculation will be profitable "dump" on the market. That, in general, may also contribute to the reduction of the market itself to the realities of a more adequate condition.

Reset mortgages
So, if you look closely at the dynamics of prices, you can see the following trend: at the end of last year and the beginning of this decline has been quite active, whereas today these processes are also ongoing, but not so fast. May be right those analysts who argue that prices will soon have to continue to fall somewhere between 1-3% each month, depending on the type of real estate.

Most lose today in the price of the usual two-and three bedroom apartments, while more smoothly slide in prices is the cheapest one-bedroom apartments. Indirectly confirm these trends and developments in the context of recent months.

Thus, taking into account the reduction in the number of transactions in August, as stated above, the number of offers of apartments in the same month in the "secondary housing" increased by 7,1% compared to July and is now a total of 12,354 apartments. However, even with the decline of activity of buyers, the proportion of flats, which was first offered for sale in the reporting month, continues to grow - by 15,8% of the total supply.

Simply put, supply increases and the level of demand is not stable.

Among the key factors that could significantly affect the decline in prices - the emergence of a sale of a large number of apartments, which were pledged with banks. "Release" of square meters have already been waiting since late 2009, but because until now this has not happened, many realtors over the past few months pouspokoilis and now does not believe in the reality of this scenario. However, until now not taken into account the time lag, without which the banks could not begin to reset these apartments.

The fact that the process of foreclosure at the troubled borrowers have just started to gain momentum somewhere in the second half of 2009. In the first half of last year, bankers are still going to restructure, provide credit vacation, etc. This means that the bulk of housing that can be thrown on the market (if it still happens), will have just the end of 2010 and 2011.

It is understandable that banks are not interested derail the market and, accordingly, the cost of their own "toxic" assets. A key factor for them to be, obviously, the conjuncture. In case of any signs of rising prices and the number of customers, banks step up efforts to implement pledges. That is, again, will pledge more actively for sale or what, at least, will keep prices from possible fluctuations in their upward.

It is generally accepted that mortgage lending in this country sooner or later be restored. However, as soon as it happens in reality, nobody knows.

There are many direct and indirect evidence that, despite claims by the bankers, the next year or two will hardly expect major shifts in the credit market. Yet one thing is clear: the conditions of mortgage loans, despite their formal renewal, will long remain unattractive and most importantly - a majority of citizens would be perceived as extremely risky, if not reckless action.

Faith of citizens in terms of stability of banks, primarily, interest rates on loans, which bankers have begun to revise together already during the first wave of devaluation of the hryvnia, obviously shaken for a long time. Moreover, not every day, even a wealthy family in a position to make an initial contribution of up to 50 - 70% of the cost of housing, and this is precisely the key condition for the issuance of these mortgage loans most.

No, finally, today, no one has confidence that prices will rise, or at least remain at current levels for at least some length of time. And so, to borrow, even if the loan is needed - not the time.

Among other things, the memory of all Ukrainian citizens will forever remain an incorrect history record devaluation in 2008-2009. When the contents of our wallets in a few days shrunken almost doubled.

Most of all, this process hit just on foreign currency borrowing, while before the crisis, except to borrow in dollars at a more or less acceptable percent of banks did not give citizens the opportunity. As a result, are now taken credit for the hundreds of thousands of families were present to trap the end of life.

While in previous years, according to estimates of the banks, the share of loan payments in the budget of an average family, tied to the mortgage, was about 40-50%, while last year it had grown to 70-80% and the number of cases has exceeded 120%. And all this by a decline in real incomes, rapid growth of unemployment and twice the fall in prices on the very same property, purchased sometime in the loan.

However, even if all that preklyuchilos with the country in recent years, the reality does not, lend to the bankers the money under their current 20-30% (and even under 10%) per annum is simply unrealistic for the vast number of citizens. For example, to borrow from the bank today amount to 500 thous. Within ten years at such rates of pay together with interest ... have almost a half million.

Of course, many bankers are trying to publicly demonstrate the optimism and the tenth, if not in the twenty-fifth time in the past year and a half predict an early return of mortgage. But in fact, upon closer examination the situation in these banks is clear - today they are themselves forced to continue to reduce their mortgage portfolios, seeing the real situation of borrowers and raking their own risky balance sheets. The volume of troubled mortgages they have officially grown in 5,5 times, but according to unofficial data rate for more than 30% of all existing contracts for loans.

Is there any reason to warm up the real estate market, which is still not really cool, and generally give the economy a long-term loans again?

Many foreign shareholders of Ukrainian banks, which are now and create the basic weather in our banking sector is far from enthusiastic about the current real estate prices, even in their present form. Market capital, where the outdated and aging in the Khrushchev malometrazhki half a century ago are worth considerably more than in many European capitals (and many times more resorts such as Cyprus, Turkey or Egypt), rightly considered foreigners still like "bubble", which only will be blown away.

Well, if during the first phase of the fall of the housing market (in the last two years) fell exclusively to the dollar equivalent, it now has all the prerequisites to a square meter started to run low in price and in the national currency.

Investment in housing is now out of favor
Even taking into account a reduction in deposit rates at banks, the situation in the financial sector today is that the profitability of the deposit of approximately one and a half, and even two times higher than that from the rental of residential apartments. $ 70-80 thousand on deposit today - it's about $ 600-800 monthly bank interest rates. Apartment in one of the sleeping areas of Kiev, bought for the same money in the process of delivery (excluding all other costs, including long delays) will bring the owner now is not more than $ 400-450 a month.

By the way, grown up in August, the market rent in Kiev headway not only in connection with the new school year (ie, the influx of new students in metropolitan high schools), but because rental housing is not cheap, even today, many times more profitable to all mortgage.

Even if we are talking about buying on credit cheapest apartments in the suburbs or in disrepair. Those citizens who before the crisis accumulated savings to buy housing for their own needs, now find nothing better than to continue to accumulate money.

After all, young families, who, for example, already have the funds to buy some sort of housing (say, $ 70-100 thousand), and much more profitable to continue to rent an apartment, than to take a mortgage and pay interest rates here and now. Gradually increasing their contributions, they will soon, it may happen, will be able to buy a home of a higher category, but at a lower price.

Actually, the statistics of growth of deposits of physical persons in bank deposits, despite the reduction in rates, precisely demonstrates that confidence in the banks (at least in the case of deposits) gradually rises. Simply put, the contributions of cash, which you can use in case of what is considered today among the citizens to a more secure investment than buying a meter in a falling market. The crisis has destroyed the faith in real estate as a reliable, absolute, and no alternative way to preserve and multiply money.

Incidentally, similar processes of outflow of cash from the real estate market (as well as the fall in the overall attractiveness of the square meter as an object of investment) is again observed around the world. If winter and spring housing prices in developed countries has stabilized a bit, then in the summer, they again have fallen off somewhere in the 15-20% in almost all countries - from America and Europe to Turkey and Japan ...

When will the "bottom"?
Price "bottom" always comes to a hair the day before the market starts to grow and has not returned to the onetime failures. Many experts are still making forecasts that the recovery will be inevitable, as price increases begin in the fall of 2009. When the forecast once again failed to materialize, the hour, "X" has been moved in the spring of 2010. Many realtors have to win back the idea that, say, in connection with the arrival of a new power team in Kiev will break new army regional officials (from the Donetsk, Dnipropetrovsk, Crimea), which will be here to buy square footage, heating demand.

It turned out, the "Donetsk" housing in the capital have long been purchased by? Like it or not, but so far predictions of those who play on the rise, for some reason do not come true. However, similarly, the same analysts did not want to see a few years ago that a "price bubble" formed on the Ukrainian real estate market, where prices were higher in Europe, while revenues have remained among the lowest in Europe, sooner or later end in failure. It turns out, and today their predictions about the end of the downturn in prices as an early conclusion of the crisis, to put it mildly, unreliable.

In recent years, increasingly there is a perception that the situation on the Ukrainian market can develop in so-called "Japan scenario". "Japan scenario" - is when the real estate market over a long period been smooth, but a necessary decline in housing prices. The period can span almost ten years in a row. It turns out that the question now should be no longer if, when and how to end a price peak, but how will the prices rise even after when the "bottom" will we truly discovered?

Help "2000"
At the secondary housing market most sales contracts today is the cheapest sector of economy class (apartments cost $ 45-65 thousand), as well as some more in the mid-range - $ 65-80 thousand is also of interest remains at the apartment business class houses in central cities and 10 years of age in the most popular areas.

The greatest demand for buyers today use the one-room apartment, purchase accounting for about 44% of transactions (for doubles - 43% of transactions, while the demand for three and more - 13%). With 65% of all transactions in Kiev have to buy flats worth up to $ 100 thousand, and 22% of transactions - from $ 100 to $ 200 thousand

The most expensive apartment in the history of Kiev, and the whole of Ukraine, was put up for sale in the year 2008 and has cost it $ 15 million This apartment with 25 rooms and an area of 994.6 square meters. m located on the street. Silkworms.

In 2010, one of the most expensive apartments in Kiev on sale for $ 9.3 million, an 8-room apartment in a four-level penthouse area of 1,209 square meters. meters on the street. Moscow in Pechersk. At the same price now exposed to several apartments in ul.Grushevskogo near the Verkhovna Rada and the Cabinet. The least expensive apartment was sold this year for $ 28.5 thousand This 1-bedroom apartment of 32 square meters. m. in the area DVRZ was sold in May this year.
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