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Why did the real estate rise in price?

New apartments have risen in price since the beginning of the year.
According to the State Statistics Service of Ukraine, the overall growth was almost 13%.
Experts are confident that new buildings in Ukraine will rise in price for several more years – until prices reach the level of neighboring European countries.
According to the capital’s developers, for six months the prices for their properties have grown from 5 to 25%.
According to the analytical report City One Development, the average price of primary residential real estate in the capital for six months increased by 16.2% to $ 705 / sq. M.
In general, the business class added the most on the market + 22%, up to $ 2252 / sq.m.
The premium (elite) class turned out to be the least demanded, the price increased by only 9% to $ 3571 / sq. M.
Economy has risen in price by 15%, to $ 978 per sq. M, and comfort – by 17%, to $ 1205 per sq. M.
The growth in prices in the second quarter amounted to 9.3% – almost the same as the real estate in Kiev added for the whole of 2018 (10%).
Experts emphasize that the rise in prices is primarily associated with inflationary processes – the rise in the cost of building materials, components, as well as construction and installation work.
Since the beginning of the year, the average increase in prices for building materials has been in the range of 12-15%, depending on the category.
Since the beginning of the year, the average dynamics of growth in prices for construction and installation work has been at the level of 10.5-12%.
Among the factors that directly affect the cost of construction, it is worth noting the increase in energy prices, which account for up to 70% of the cost of cement production.
There is also a second reason, which, according to the director of the Novopecherskie Lipki Real Estate Agency, Vladimir Gorsky, is the key one – this is a deferred “abnormal” demand after 2020 and an increase in investment demand due to the fall in annual deposit rates from 10.5-11.5% in hryvnia in July 2020 up to 7-7.5% in hryvnia at present.
Among other things, demand and prices were boosted by more affordable mortgages, the unfinished reform process of SASI, possible changes in the rules of taxation of real estate transactions and the need to refinance Ukraine’s external debt as the main factor determining the associated risks. with long-term currency stability.
Some experts directly call the legislative initiatives of parliamentarians one of the reasons for the rise in housing prices.
For the primary housing market, June was a month of turmoil. The main reason that can be called a new bill on amendments to the Tax Code of Ukraine.
The primary market reacted unequivocally – the median primary price increased by 9%.
If bill 5600 is passed, it will lead to even greater growth in property prices.
Recall that the bill provides for an increase in taxes on the purchase and sale of real estate.
For example, the bill introduces personal income tax in the amount of 18% of the amount from the sale of the third and subsequent real estate objects. In addition, it also increases the number of transactions in the real estate market subject to VAT. Experts predict that as a result of such innovations, apartment prices may rise by 20-30%, and I agree with them.
Depending on the location, format, concept of the complex, in 2021 new buildings in the comfort segment will rise in price by 22-25%, in the business class prices will rise by 24%, and in the elite segment by an average of 41%.
And on September 14, good news came – the Verkhovna Rada considered amendments to the bill number 5600 and removed the taxation rule.
At the moment, there is an objective price growth trend in the residential real estate market of Ukraine. Our favorable risk outlook suggests that this trend will continue this year and next.

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