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REAL ESTATE MARKET IN FEBRUARY 2017: TRENDS AND PROSPECTS OF DEVELOPMENT

In February, market trends developed according to the traditional scenario for this time. In the run-up to the spring, the market began to work more actively, potential buyers began to look at not only more often, but also more purposefully.
The average price per square meter in February decreased by 2.8%.
The average minimum bid price in February fell by 3.3%.
Compared with January, the number of transactions increased by about 5%.
The analysis showed that during February the number of apartments actually sold on the secondary market increased by 5-7%.
Prices during the bidding were, as a rule, noticeably lower than the average bid prices. At the same time there was a tendency of growth of inquiries of buyers. Another thing is that in most cases this trend was not supported by either real money or the willingness of sellers to sharply discard prices.
Vendors, as a rule, are ready to cede within 5-10% (the more expensive the object, the higher this percentage). But buyers are waiting for much more significant concessions. As a result, the parties can not find any compromise solutions. After a few months, sellers reduce prices, but market realities are already different; The proposals again hang in the air. And so it can last for years.
Focusing on the average price of offers and advice of non-professional intermediaries, sellers are constantly late with a decrease in prices, as a result, in a falling market, they lose significant amounts.
Analyzing such epics, every time you are convinced that these sellers from the very beginning lacked an experienced realtor, specializing precisely in this segment of the market. Such a realtor not only tracks similar objects, but also participates in their purchases and sales. Therefore, professional enough can judge for how much and in what timeframe you can sell a particular apartment.
Major events, processes and trends:
Risks of overproduction of housing construction in conditions of low purchasing power of the population.
The construction industry is now on the rise. According to the State Statistics Committee and analytical materials of the National Bank, in recent years it has become one of the most powerful locomotives for the development of the Ukrainian economy. In 2016, the volume of completed construction work increased by 35%. The production of building materials (concrete, ceramic plates and tiles, more than 1.5 times) has significantly increased.
The growing needs of construction organizations significantly increased the output of industrial products in other sectors, including supported by domestic steel production.
But this is only one side of the coin.
The second side is the low purchasing power of the population, the actual lack of state financing of housing construction and the clearly insufficient volume of mortgage lending. And all this against the background of numerous abuses, violations, corruption schemes in the construction industry.
World experience shows that in such conditions sooner or later there are crises of overproduction. Moreover, many economists consider such crises an inalienable attribute of capitalism. The "Great Depression" in the United States and the economic crises in Europe have taught the capitalists a lot (including the effective combination of the principles of "free enterprise" and state planning). As a result of the crisis, overproduction has significantly smoothed out, began to be, as a rule, local in nature.
We need all this only to learn. And in the conditions of corruption of all branches of power and a massive desire to withdraw money from the country, it is very difficult.
Developers working in conditions of severe competition, lack of own funds, unsettled legal framework, understand the problems better than others. And, nevertheless, lay new objects.
The development of new construction sites is accelerating, as evidenced by Goskomstat. In 2016 for the construction and reconstruction of housing in Kiev was spent 7132242 thousand UAH, which is 19.7% more than in 2015. At the same time, it was commissioned 1334.0 thousand m2 of total housing, which is 2.3% less than in 2015.
Obviously, developers are hoping to build and sell the houses they started before the crisis of overproduction. At the same time, they risk not only their own money, but also the money of investors (in most cases investors are ordinary citizens, many of whom sold their apartments and invested money in construction). In these conditions, the bankruptcy of developers and the freezing of housing construction can cause social upheaval, play a role of a snowball for many industries and industries.
Changing the requests and priorities of potential buyers
The main demand was concentrated in the segments of the cheapest housing, as well as in the segment of new buildings. At the same time, there is a tendency to increase the demand of a large number of people. If not so long ago many bought "gostinka" in the state of "under repair" and small one-room apartments in remote areas of the city, now they are trying to buy the same apartment in good condition, with a standard layout and sufficient area (not a "small family" in areas with developed infrastructure).
As prices decline quite slowly, consumers' demands are growing, and money is clearly not enough, the bulk of potential buyers are eyeing, go to views, bargain (in the calculation to find panicked or very hurrying sellers).
As far as we can judge (including, based on the opinions of experienced certified realtors), the price ceiling of most potential buyers is somewhere around $ 20,000 - $ 30,000, including all payments. If we are talking about more significant amounts, then the purchase is usually associated with the sale of existing property. To the family savings are added money from the sale of real estate, as a result of the sellers exchangers improve their living conditions.
Practical implementation of such an exchange with surcharge requires time and considerable effort. First you need to sell, and then buy; Any of these operations can be delayed, and even fail. There are risks associated with failure to comply with previous agreements and the loss of deposit.
Simplify the solution of problems associated with the sequence of operations for the sale of one apartment and the purchase of another, either in the primary market (many developers offer installments for up to three years, with a minimum first installment of 30%), or with the help of a professional real estate agency.
The main priorities of buyers are very similar. This is a low price, good area with developed infrastructure and public transport, convenient layout. And also a good condition of an apartment, a house, city engineering networks, availability of repair, furniture, home appliances, insulation. That's only the priority system for all buyers are different.
Having very limited budgets, and actively resembling views, buyers quickly begin to understand that something has to be conceded, otherwise there will be no deal. And in real situations they are inferior to many, often giving priority to the minimum price.
But this is not always the case.
According to the professionals of the market, if the difference between the apartment in a "repair" condition and housing with quality repairs is not more than 5000-6000 dollars, then many buyers prefer to pay extra (often take a loan or borrowed).
Many buyers prefer the location and quality of the house (morally and physically obsolete "Khrushchev" located in disadvantaged areas ", do not even consider).
There are buyers who are specifically looking for apartments with fresh repairs, modern kitchen, plumbing, home appliances. All this is quite expensive, but when sold together with the apartment comes with a significant discount.
In all these cases, an unprepared buyer, poorly knows the market, the prospects for its development, as well as the specific features of specific types of houses and apartments, it is difficult to understand. There is always the possibility that after a while (perhaps even years later) it will be found out that the priorities for buying an apartment were set incorrectly. Do not take this for advertising, but without the recommendations of an experienced professional certified realtor in such matters is difficult to do.

Forecast for March and near future
We believe that in March the main trends of the last two months will be further developed.
With the advent of spring, the level of business activity will grow by 10-15%. Wait for a more significant activation of the market in the current difficult conditions is unlikely.
Average bid prices in March will continue to decline. The most probable, in our opinion, forecast for March is a decrease of 3%. Approximately the same rate of decline in the average price of offers, most likely, will be in April.
It is extremely difficult to give an informed forecast for a longer period. The level of uncertainty is very high.
Since we do not take our own medium-term forecast, we will refer to the generalized opinions of participants in our forecast contests.
Weighted average forecast for the first half of 2017: a decrease in the average offer price per square meter by 8.3% for 6 months. 482 qualified respondents took part in this competition of forecasts.

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