Tashkent, Uzbekistan (UzDaily.com) -- According to the results of the fourth quarter of 2023, housing prices continued to grow, despite a slight decrease in activity. The residential rental market has relatively stabilized since the beginning of the year.

Activity in the real estate market in the fourth quarter of 2023 decreased slightly. During this period, 83.2 thousand transactions were concluded, which is 10% lower compared to the previous quarter (92.9 thousand) and 2% less than the same period last year (85 thousand).

At the same time, against the backdrop of high market activity in the middle of this year, the number of transactions at the end of 2023 increased by 4.4% and amounted to 335 thousand units.

Activity this year was mainly supported by high demand given the attractiveness of the real estate market in comparison with other investment and savings instruments.

High demand is also facilitated by the demand for mortgage lending among the population, which significantly accelerated in October-November (Figure 3).

Despite a slight slowdown in activity in the fourth quarter, prices in both the primary and secondary housing markets continued to grow. In the secondary market, the soum price index at the end of December in annual terms amounted to 35.1% (in dollar terms - 23%). In the primary market, prices increased by 39.6% and 26.9% in soum and dollar indices, respectively (Fig. 4 and 5).

Changes were made to the web scraping methodology for the primary and secondary markets in Q4. To avoid significant emissions, the upper limit set at the initial stages of web scraping was 15 million soums (~ 1200 USD) per 1 sq. m. of residential property was completely removed due to the achievement and growth of the number of advertisements at prices above the border (mainly in the capital).

Growth rates remain significant in large and tourist centers (Tashkent, Tashkent, Andijan, Bukhara and Khorezm regions), where rapid infrastructural development is observed. The sum index in these regions increased by more than 40%.

Housing rental prices stabilized in the fourth quarter against the backdrop of stable supply and slowing demand. At the end of the year, the cost of residential rent increased in soum terms by 8.8%, in dollar terms - decreased by 1%.
At the same time, in the capital, the growth in rental costs has slowed down significantly more than in the republic. In Fergana (+21.1%), Bukhara (16.5%) and Tashkent (17.6%) regions, rental prices grew faster compared to other regions, in which the rate of price growth was moderate (within 5- 7%).

Supply, which was limited in previous periods, continues to gradually increase. This is likely due to an increase in purchases of residential real estate, some of which are purposefully used for subsequent rental.

At the same time, price trends in the housing purchase and sale market have a direct impact on the rental market. Preliminary estimates for the period April 2022 – September 20231 show a positive relationship between these markets. With residential property growing by 1%, rental housing prices are adjusted by 0.44%.

With the continuing increase in supply in the market under consideration, the difference between the purchase price of housing and the cost of rent is growing, which leads to a certain increase in the payback period. Thus, if in 2022 the payback period for purchased housing leased out on average was 7.1 years, then in 2023 this figure increased to 8.2 years.

The cyclically interrelated increased demand against the backdrop of attractive profitability and rising prices have led to a certain decrease in housing affordability in recent years. In 2023, the growth gap between nominal incomes and house prices widened to 20%, up from 4.4% in 2022. On the contrary, due to the stabilization of rental prices, the difference between the growth of income and rent became negative (-5.2%).

Residential real estate market in Tashkent in 2023

The residential real estate market in the capital continues to expand significantly and leads to an increase in the price gap with the regions. Prices on the secondary market of Tashkent increased significantly in 2023 (from 10.5 million soums to 14.9 million soums or from 933 dollars to 1212 dollars per 1 sq.m.).

Rent prices in Tashkent decreased by 9.3% in dollar terms compared to last year. A decrease in rental prices was observed in almost all parts of the city, with the exception of the Sergeli district, where demand remains relatively higher.

Land prices in the capital increased from 263 million to 362 million per 100 square meters. m (1 weave). The cost of land plots increases relatively equally across regions.

The calculation and analysis of indicators in this review are based on open data available on web pages. The results obtained are average offer prices and do not imply the drawing up of contracts or the implementation of transactions under the specified cost conditions.