Until the end of 2023, a significant increase in demand in the primary housing market is unlikely. Accordingly, this factor is unlikely to affect the pricing policy of developers – it is expected that average fluctuations in the cost of m2 will be insignificant and will not exceed 1-1.5%.
Vladimir Sementsov, co-founder and managing partner of INSPI Development, spoke about this.
According to the expert, government mechanisms that could somehow revive the demand for apartments in properties under construction remain insufficiently effective. Indeed, according to the preferential lending program “EOsel”, the number of transactions for the purchase of housing under construction is no more than 2-3% of the total number of approved loans.
In addition, as Sementsov noted, it is not yet known what the mechanism for using certificates for destroyed housing will be within the framework of the “єВіднінння” program in the primary market and how many citizens will consider the possibility of using certificates in new buildings. He recalled that up to 5 thousand applications have already been received under the “єєВідніння” program, and the number of Certificates generated is just over 200.
“We understand that developers have the opportunity to stimulate demand under the eOselya program. However, this will require them to change the mechanisms used for purchasing housing, namely to raise funds through construction financing funds, the purchase and sale of property rights to unfinished apartments, or through bonds. Now Most developers in projects whose construction began before February 2022 are not ready for such innovations, working according to old sales schemes,” the specialist noted.
In his opinion, joint lending programs between banks and developers and the general trend towards reducing interest rates on mortgage banking programs can become important mechanisms for increasing demand. However, in the next 1-2 months we can only talk about more active development of such programs with an insignificant increase in mortgage transactions – by 3-5% until the end of 2023.
“Since the beginning of the full-scale invasion, demand has decreased by 3-5 times from the “pre-war” level. And now it is more or less constant. In fact, this should be considered the starting point for the projection of demand in 2024,” emphasized Vladimir Sementsov.
According to the specialist’s forecast, the increase in demand in the primary market may be associated with several main factors, these are:
- victory in the war and post-war reconstruction;
- economic development, accompanied by an increase in citizens’ incomes;
- the effectiveness of reforms in the construction industry: practical minimization of risks for home buyers in the primary market;
- active development and improvement of state preferential programs for lending for the purchase of housing and the introduction of an effective mechanism for compensation for destroyed housing;
- development of mortgages through joint programs of developers and commercial banks on more favorable terms for the borrower.
“Developers are adjusting their plans to “war” realities, not counting on global growth in demand. Therefore, efforts are concentrated on completing the construction of already begun facilities and bringing to life those residential complexes that were hastily put into operation during a full-scale war. And most importantly – Systemic changes in business processes are being prepared for the future, the key of which are changing the practice of selling housing in the early stages of construction, attracting initial capital for the implementation of the project, as well as paying more attention to the qualitative characteristics of future residential complexes,” concluded Vladimir Sementsov.