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Builders have overdone it: the number of housing units exceeds demand

Строители перестарались: количество жилья превышает спросIn this regard, developers may face financial problems

Average prices for apartments in Ukraine from July until the end of 2016 fell by 4.9%, and from January to March of 2017 and by another 1.9 per cent. The index of housing prices in the world over the same period increased 6.5%, showing the highest score for 3 years.

Financial analyst Alex Kush said that the high rate of decline in housing prices in Ukraine related to the inability of citizens and businesses to plan their income, expenses and investments.

“Individual planning strategies investments, as a large private investor, and the individual plans of people always built on the understanding of the prospects for at least 5 years. And now this term was reduced even up to 1-2 years. More than 3-4 months no one can do anything to make. No one knows what will be the rate of inflation in six months”, – said the analyst.

Assessment Alexei Kusch, real estate, which is a long term investment will start to recover when businesses and the Ukrainians will see a stable income in future years, or the economy will be a new growth point.

“Nobody is going to invest in a property that falls in price. Buy it only those who need it or those who do not see any opportunities for alternative investment. With the aim of earning one now in real estate not invested. Prices can still fall. Moreover, the devaluation of the hryvnia devalues the property,” said the analyst.

The expert also noted that the real estate market generated negative trends, in particular for developers that can face financial problems. Against the background of falling prices, little demand for real estate, housing construction is 30% ahead of the dynamics of economic activity in other sectors.

Also read: Overdone: construction fails and bloopers

“Builders are increasing the pace of growth. And these rates correspond to the economy that is developing significantly more effective than ours. Dynamics of construction should be less than at least 30%. Here the risks are very substantial. We have almost the main source of investment in real estate is money of the workers. And this is not a very reliable source,” – said the expert.

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