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Friday, January 19, 2007

Kiev – the fastest growth of real estate prices in the world

Ukrainian press analyzes annual real estate index report published by Global Property Guide (GPG).

Property boom in Ukraine
Ukraine has caught a virulent strain of the property boom virus. In the capital city of Kiev (pop. 2.6 million) house prices rose by around 65% in 2005, according to Kiev real estate agents In Real. This extraordinary growth follows 30% price growth in 2004, and 35% price increases in 2003. In January this year (2006) the situation was reported to have stabilized, but of course no-one is sure what comes next.

The average price for properties located in central Kiev is now around €1,240 per square meter (sq. m.) in 2005, according to the local estate agents Teren Plus. The prices range from €700 per sq. m. to around €2,350 per sq. m., depending on the district where the property is located. The most expensive apartments in the city center or the Dniper River cost around €3,900 to €7,800 per sq. m.

This is curious, because there is no hyperinflation in Ukraine. The official inflation rate for 2005 was only 8%.

The hryvnia was introduced in 1996 and initially steeply declined against the US$, but the currency has been rather stable against the US$, fluctuating for the past five years between H5.5 to H5 to the US$, reflecting a semi-peg.

There is clearly a speculative element in a situation in which monthly real estate prices are rising at an average rate of 5% per month, but there are other factors too.

Original source