The cost of residential projects, the start of construction of which will begin in the second quarter, includes an exchange rate of 45-47 UAH/$. Marianna Bigunets, sales director of the construction company GAZDA, spoke about this.
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What will the exchange rate be
According to the specialist, the weighted average rate during the entire construction cycle of new facilities, which averages 2 years, is expected to be around 43-44 UAH/$.
As for economy and comfort class facilities, the construction of which began in 2022-2023, then by the end of the year the cost of m² will be calculated at an exchange rate of 42-43 UAH/$.
She recalled that according to the macroeconomic forecast, the weighted average dollar exchange rate in 2024 will be 40.7 UAH, and at the end of the year the rate will cross the mark of 42 UAH.
The expert noted that developers carefully analyze the economic situation in the country and adjust prices, primarily based on the main objective factors.
1. The situation on the money market. In the primary housing market, the cost of m2 is tied precisely to the dollar exchange rate. From January 1 to July 1, 2024, the US currency rate increased from UAH 38 to UAH 40.45. That is, according to the official exchange rate, the hryvnia has lost at least 7% of its value.
2. Inflation rate. According to the expert, after an increase in electricity tariffs and an increase in excise taxes on fuel, the price level may increase significantly: depending on the group of goods and services, by an average of 10-15%. At the same time, according to the official forecast, in the second half of the year inflation will accelerate to 5-6% and at the end of the year will reach 8.2%.
“Increasing prices are a reality, at the same time, manufacturers, suppliers for construction products, prices are usually revised with a small margin, which amounts to an average of 5%,” emphasized Bigunets.
3. Reducing the number of new buildings. According to her data, since the beginning of the full-scale invasion in Ukraine as a whole, the number of new objects has decreased by more than 2 times, and next year the objective market will “sink” to 30% of the 2021 volumes.
She emphasized that as a result of a decrease in construction volumes from 2022 to 2023 and a limited supply of residential complexes or cottage communities of the required quality in the current year, supply and demand have almost leveled off. Currently in Ukraine, continuous construction is observed only in 1/3 of residential buildings from the total number of declared new buildings. And the lion's share of them falls precisely on the safe regions of the country.
4. Concentration of demand in safe regions. This is an important circumstance, which in 2 years has actually equalized the prices of objects in the Western region (Transcarpathia, Ivano-Frankivsk, Lviv, Chernivtsi) with the Central (Zhytomyr, Poltava, Vinnytsia) and the largest cities, where they have usually always been higher: Kiev, Odessa, Dnipro, Kharkov. And in some places the price gap at the start of construction in different regions, if we compare objects similar in their characteristics, does not exceed 5-10%. For example, as Bigunets notes, even before the start of military aggression, the average difference in the cost per square meter at the start of construction could reach 40%.
At the same time, depending on the quality characteristics of the residential complex, the greatest demand is observed for new buildings in Zakarpattia, Lviv, Chernivtsi, Ivano-Frankivsk, and sometimes it is 1.5-2 times higher than in Kyiv or, for example, Dnipro.
5. Qualitative characteristics of residential complexes, townhouses and cottage villages. This refers to the quality of the building materials and construction and installation works used, the pace of construction (compliance with the declared deadlines), the number of floors in the residential complex, the availability of recreational opportunities, the comprehensive infrastructure complex created by the developer (parking spaces, social, children's and sports infrastructure facilities), safety of residence, distance from the central part of the city, convenient transport links.
Cost forecasts
Taking into account objective economic factors and depending on the quality and class of housing, according to the expert, by the end of the year the cost of houses in new buildings may increase by an average of another 10-15%.
Thus, in total for 2024 new buildings may rise in price by 25-30% in hryvnia equivalent. At the same time, the main “ceiling” in the process of rising housing prices in the primary market is the level of construction costs, in some places up to 70-80% of the cost per m².
The most significant incentive for keeping demand at a high level, according to at least in the future, in the coming year, installment plans may become more loyal to buyers.
“In order not only to “survive”, it is not enough to simply “raise” prices, even if there are enough objective reasons for this. In my opinion, developers must also change, improving the quality of housing, developing different formats, and creating purchasing mechanisms that are optimal for buyers,” she emphasized.
API of exchange rates in Ukraine in real time
- Currency Real Estate
