Photo: PexelsIn the previous two years, we have witnessed abnormal growth, both in construction and prices, which on several occasions has resulted in a monthly increase in the average square meter of up to 300 euros. Now, at the international level, a factor has emerged that could turn the whole trend in the opposite direction.
To the surprise of many, in the last 2 weeks on the global markets, a rather serious decline in the value of iron prices has been noticed. According to the website tradingeconomics, the price of pig iron per ton is currently 115 dollars, while on June 8, it was 142.4 dollars per ton.
Given that steel has a very wide range of uses in several industries, including the construction industry, the costs of these industries are now beginning to fall. Consequently, all that affected the price of new construction. If the fall in steel prices continues, it is very likely that the average price of apartments, which is, for example, in Belgrade in the case of old buildings 1,680 euros, and new buildings 2,165 euros, will go downhill.
Prices per square meter in Serbia
According to the latest report of the Republic Geodetic Authority, 1.6 billion euros were reversed on the real estate market in the first quarter of this year, which is 23.1 percent more than at the same time last year. More than half of that money was spent on the purchase of apartments - 889.5 million euros.
The same report states that in one year, the price of residential square meters in the whole of Serbia increased from 5 to 23 percent. Old and new construction became more expensive, and the biggest jumps in the price were recorded in Nis, while the smallest were in Kragujevac, writes blic.rs.
According to the data in the report, the cheapest square in the capital in apartments that already had owners was 400 euros, the most expensive 4,902 euros, and an average of 1,680 euros. When it comes to new apartments, prices range from 600 to a staggering 9,115 euros, while the average square footage of new construction is 2,165 euros. An apartment in a new building in Novi Sad costs an average of 1,505 euros per square meter, 16 percent more than a year ago, and in the old building it rose from 1,255 euros to 1,517 euros. In Nis, an apartment of 50 square meters in an old building is almost 10,000 euros more expensive. Instead of last year's price of 831 euros, now the square is on average 1,020 euros, which is an increase of as much as 23 percent.
A key stalemate in the Chinese market
The price of iron ore has rejected all its gains for this year because investors have become frightened by the fall in Chinese demand, writes the Financial Times, adding that this is a problem for some of the world's largest mining companies.
According to S&P Global Plats, iron ore weakened by 8 percent yesterday and fell to a six-month low, the ninth consecutive session of the fall. Analysts warn that it could now fall to around $ 100 per ton, for the first time since November, if the Chinese real estate market remains at a standstill. This country accounts for about half of global steel production.
"The beginnings of construction this year were not strong enough and finally the orders disappeared," Colin Hamilton, head of commodity research at BMO Capital Markets, told FT. "Ironworks now have to cut production."
The real estate market accounts for 40 percent of the total demand for steel in China, but the construction of new homes fell this year because Beijing decided to take control of prices in that market and finally reduce the level of debt to large construction companies.
"May was especially bad, down between 30 and 40 percent from last year," Hamilton said.
At the same time, the country's steel industry continued to maintain stable production, at around 1.1 billion tonnes a year.
In this city in Serbia, the price per square meter jumped by as much as 400 euros.
Source: blic.rs
