Over 1000 apartments were sold in Kharkov on the primary market in 2012

One of the major trends in 2012 can be mentioned the growth of the market activity in the second half of the year by the reserved price growth of the objects of all classes on the primary housing market. This was stated in the annual analytical review of the primary housing market in Kharkov, made by the specialists of the marketing department of double liability company (DLC) “Zhilstroy-2”.

Offer on the primary real estate market .

The volume of the market offer in Kharkov and its suburbs dated by December is almost comparable with the offers in the early 2012, when apartments of 46 objects of the primary market were in the market turnover. The objects with a high degree of readiness have dominated in the proposition structure, 71 % of houses were built by almost 76% - 100%, and 18% of objects were ready by 31% -75% and only 11% of houses were in the early stages of construction.

It should be taken into account that a capacity and, consequently, the volume of the deals should be determined due to the square meters, which were for sale. Thus as to December 2012 the volume of the offers in almost finished or brought into operation houses was 31% of the common market rate. The largest share (of 45%) made square meters, which would have material equivalent in 2013.

The start of selling the objects, which are on the stage of the foundation pit, brought down the calculated value of the average market price index. Primary, this is specified by the location and class of the new houses. Over 50% of the market supply is concentrated on the remote areas of the city Kharkov (Figure 1). In comparison with the index recorded in December 2011, the offer in the central regions has been greatly cut and in the suburbs - increased.


Figure 1 – The structure of the offer due to the location, area (December 2012)

The features of territorial distribution of new buildings are reflected in the structural distribution of the selling square meters regarding the class of the houses. Thus, the objects of the economy class made 62% of the offer, of the business-class – 22%, and premium – 16%.


Figure 2 –The structure of the offer due to the class of the object, area (December 2012)

Depending on the number of the rooms the market offer is spread almost through the equal parts: one room apartments had in the its general structure 36%, two room – 33%, and three-room – 31%. At the beginning of 2013 the large part of the building construction is available in the apartments of 65-80 m2.

The analysis of the proposal on the primary housing market has shown that there were changes on the structure of the market niches, which are occupied by the developers. The market shares of the major developers such as investment-building complex “Avantagh” and “TMM” have significantly reduced. The leaders of 2012 on the building volumes were “ Trest Ghilstroy-1”, “ Ghilstroy -2” and “ Kuryaghskij DSK”. Their share in the total volume of construction and housing in Kharkiv and suburbs was about 61%.

The demand on the primary real estate market

Last year there were fixed the seasonal surges in demand of the primary housing market in general and relatively stable throughout the year the demand for objects of economy class. According to the preliminary estimates, 1100 apartments were sold on the market in 2012.


Figure 3 – The structure of demand on the apartments depending on the location (January-December 2012)

The maximal numbers of the flats were sold in the objects, located in outlying districts of Kharkov and in the suburbs, 38% and 28% of the total sales volume, respectively. ( fig. 3)
As mentioned above, the demand is concentrated on the houses of economy class (fig. 4)


Figure 4 – The structure of the demand on the apartments depending on the class of the object (January-December 2012)

According to potential home buyers, the most popular area in Kharkov within five years is Saltovka, Pavlovo Pole, and Alexseevka. The supply in Saltovka for the year 2012 has significantly decreased, while consumer demand is partially compensated by the objects of the secondary market.
As alternative to the objects on the Saltovka the buyers consider the apartments in the area of the metro Holodnaya Gora, where the volume of the offer made about 40 apartments to the end of the year and in the new houses, where they continue to sell the apartments in the new building on the Avenue of Marshal Zhukova, 18 A from the company “Zhilstroy-2”.
The increase of the consumer demand on the primary market in Kharkov was followed by the next factors:
- Decrease of the average price of the square meters during six months;
- Possibility to buy a house by the developer in installments;
- Intensification of the private investors in order to protect their funds though investment into the real estate;
- Recovery and the growth of the consumer confidence, which has helped to stabilize the real estate market and the integrated approach of the developers – the quality and the timing of construction, adequate costs and the proposition on the maintenance services after the completion of construction;
- Implementation of the state mortgage programs under the 3% and “Affordable accommodation”.
A comparative analysis of demand and supply on the primary market has shown that basic market factor, which drives demand, is still the cost per square meter. The housing need is met largely through the acquisition of apartments of economy class. In this case, the buyers have high requirements to the location of the future house and qualitative characteristics of the apartments. If the trend of the supply growth of economy class will be saved in 2013-2014 it is possible to predict the origin of the shortages in the segments of the premium class and business.

PRICES

The average price of the square meter on the primary real estate market in Kharkov in December 2012 made 947 $ or 7670 Hrivnia (figure 5). The annual growth of weight average of the price index, which is calculated by taking into account the structure of the offer, made less than 1%.


Figure 5 – The dynamics of the price index for the primary housing market (January –December 2012)

Price fluctuations are specified by the change of the offer structure, firstly, and influence of the seasonal component, secondly. The decrease of the price index in June 2012 influenced both an entry of the new economy class facilities into the market and calm in relation to the Euro 2012 and the following summer holidays. The market has traditionally intensified in autumn that the developers have reacted with the rising of the housing costs. Also it should be noted that the increase of the cost per square meter is caused by the increase of the availability of the facilities under construction – 17 house entrances in the 6 residential complexes were commissioned in Kharkov in December.
Traditionally, the highest prices were fixed in the central regions (Centre, Sokolniki, Pavlove Pole, m. Nauchnaya). The lowest value is typical for the remote areas and suburbs – Rogan and Pesochin. The average housing prices in Kharkov in different segments of the primary residence market were 1535 $ in premium class, 950$ business class, economy class – 734 $.

FORECAST.

One of the most important features of the year 2012 was to reduce the supply of the housing under construction on the primary market in Kharkov. At the same time each year with the increase of the wear of the apartment share the capacity of the qualitative offers on the secondary market will also decline. The limited supply of the affordable apartments made possible for developers to start selling in the early stage of the project implementation. An attractive price per square meter in the new projects, a positive trend in sales and an increase of the readiness level of the houses will affect the price increase, which will allow for companies to keep pace and timing of the construction. Taking into account the current trends in the market development of the primary market of Kharkov, it can be predicted a moderate price increase during the coming year by 5-10%.
It should be noted that a number of construction companies in the city plans to launch new residential projects in 2013, including the large-scale projects of the mass construction areas. New facilities will be implemented in the economy-class segment, which will force the developers to compete primary by the value, loyalty and flexible system of payment through the installments.

Sources: stroyobzor.ua

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