Ukraine’s housing market prospects: up or down?

Ukraine used to have an acute housing problem owing to the lack of effective social policy in the housing sector, aggravated by the low level of housing provision in Ukraine and its relatively high cost. During the past few years, the growth in the volume of housing construction, mainly in large cities and in their suburbs, has made significant adjustments to the market, though. Given the historically high need for housing and a number of existing conditions for growth in this market, there has been significant progress in the development of the housing sector.

Written by Sergii Zapototskyi – UVECON, EECFA Ukraine

Tetris Hall Residential Complex, Kiev. Source: http://tetrishall.com.ua

Housing market situation

Since 2015, the market has grown quite significantly for a number of reasons. First of all, due to the sharp devaluation of the national currency when the best option not to lose one’s money was to purchase a residential real estate. This process accelerated the crisis of the banking system. The lion’s share of the money that Ukrainians paid to developers was taken into banks where they were on deposits with fairly high interest rates. Another problem was providing housing for internal migrants, soldiers and their families, and the like. Customers tended to choose dwellings in new buildings where, when buying, the prices were more acceptable, and when selling, they could stick to their positions. Under such conditions, the housing market began to grow, including the primary one.

More details on Ukrainian housing market trends can be found in the EECFA Forecast Report Ukraine that can be purchased here.

In fact, this growth was driven primarily by the increase in large cities and their suburbs. In Kiev, the year 2013 registered about 130 newly constructed buildings, while in 2015 around 220 residential buildings were built. In 2016, already 290 such buildings were built, whereas at the beginning of 2018 there are more than 330. Within the Kiev region, the figures are somewhat smaller, though the trends are very close. Although five years ago Lviv lacked sufficient new residential buildings and there were only few construction sites, today there are approximately two hundred sites. The situation is similar in Odessa, where there are now almost one hundred and fifty new residential buildings. In Kharkov, there are approximately a hundred new buildings, almost 70 in Dnieper.

Thus, we can observe a growth in construction volumes, and consequently, a rise in the commissioning of housing in these regions. Kiev region remains a leader in housing put into use, accounting for 35% of all housing put into use in this region. This attracts investors due to lower housing prices and the fast transport access to the capital city Kiev. In 2017, the share in Kiev region is 18%, and in Kiev city, another 17%. In the capital city in 2017, only holding company Kyivmiskbud commissioned more than 300 thousand square meters of housing. In 2018, the company plans to put into use at least seven new facilities on around 450 thousand square meters.

The dynamics in housing put into use in Kiev region shows considerable input volumes when compared to other regions. Thus, over the past 10 years, in Kiev region (Kiev city + Kiev agglomeration), 28 million square meters of housing was put into use, Continue reading Ukraine’s housing market prospects: up or down?