The main factor in price changes on the market is the dynamics of demand and supply of housing. After the start of a full-scale war and a noticeable downturn in the real estate market in 2022, in 2023 and 2024, the demand for square meters began to increase. However, the restoration of the indicators of the pre-war period is possible only in a year or two and under the condition of a stable situation in the country. Also, a surge in demand can cause the war to end.
From 2021 to today: how has the real estate market changed?
During 2023, the interest of Ukrainians in buying a home was relatively stable. However, 20-30% fewer citizens want to buy real estate than before the full-scale invasion.
There are several reasons for this. First, it is a noticeable decrease in the number of the population in the country due to migration and hostilities. Calculations by the Center for Economic Strategy (CES) show that since February 2022, 4.9 million Ukrainians have left abroad. According to the data of the General Prosecutor’s Office, by the end of 2023, about 12,000 civilians were considered to have died as a result of hostilities. Data on the number of fallen soldiers are classified. At the beginning of 2024, the Office of the President of Ukraine talked about the figure of more than 30,000 dead defenders.
Secondly, the high level of instability, shelling and financial problems faced by a large part of Ukrainians do not contribute to the desire to invest in housing.
On the other hand, the revival of the market was somewhat facilitated by the movement of internal migrants. The Ministry of Social Policy reports on 4.8 million IDPs. Some of them were able to buy housing in other cities, while others rent. Some Ukrainians, whose homes were destroyed as a result of hostilities, are also buying apartments and houses. All this (especially in 2022) caused a noticeable increase in real estate prices in the western regions of the country, which are considered safer.
Detailed sales statistics for 2024 are not yet available. However, if you focus on data of the Unified Register of Notary Forms, then in the first quarter of this year more than 181,000 agreements on alienation of housing were concluded. This is one and a half times more than in January-March 2023. At that time, about 117 such forms were used. However, this is still 16% less than in the first quarter of 2021.
Note that not all forms certify sales agreements, as several forms can be used for one agreement. However, the accounting of blanks clearly demonstrates the trend in the market.
Housing prices: everything depends on the region
At the beginning of 2022 in Ukraine was calculated 8.09 million residential buildings. These are both individual houses and apartment buildings. The total number of apartments in the country was 15.52 million. At the same time, there were 55,000 dilapidated and old buildings (those to be decommissioned). Some of them still housed 42,000 people. Currently, it is difficult to estimate the number of damaged and destroyed buildings. However, there are much more of them.
This means that the supply of housing in the secondary market should decrease. The supply on the primary market will also decrease, since, according to the State Statistics Service, the volume of construction of residential objects in Ukraine decreased by 4.6%. And this is compared to the crisis year of 2022. In combination with the revival of demand caused by the decrease in the outflow of Ukrainians abroad and the effective operation of preferential lending programs (“eOselya”), etc., all this means that housing prices will rise in the near future.
In general, an increase in the cost of square meters was observed even in 2022. Then, apartments on the primary market rose in price by 12.7%, and on the secondary market – by 11.4%. In 2023, the price of new buildings increased by 14.6%, and the price per square meter of the old housing stock increased by 17%.
Price reductions in regions bordering Russia, areas near the front and in Kyiv are offset by rising real estate prices in western regions.
A decrease in prices in 2023 is most likely not worth expecting, since developers are freezing old projects and are in no hurry to start new construction. Homeowners in the secondary market are usually in no hurry to sell an apartment or house if the price does not suit them. At the same time, some apartments may be put up for sale within a year or two. This primarily applies to middle and upper-class real estate, as often its owners have invested quite a lot of money in repairs, and now they do not want to lose the investment, despite the low demand in this segment.
As for those Ukrainians who reduced the price in order to sell their home faster before moving abroad, there are far fewer of them today than there were in 2022 or 2023.
Trends in the global real estate market
Residential and non-residential real estate is traditionally considered a profitable investment. However, after the collapse of the housing market in the United States caused the global financial crisis of 2008, investors are quite cautious about investing in such assets. The experience of Ukraine says the same thing – buying an apartment in Dnipro or Kharkiv today can hardly be called a profitable investment, although the situation was radically different 3 years ago.
In general, the situation on the housing market is usually correlated with the state of the country’s economy. When there is an increase in GDP, the welfare of the population increases, the political situation is relatively stable, and cheap loans appear on the market. This contributes to the revitalization of investment activity in various assets, in particular in real estate.
The consequences of the corona crisis and the Russian-Ukrainian war had a negative impact on the world economy, and as a result, on the housing market in many countries. However, the expected recession did not occur, the economy held firm and began to recover. If there are no significant upheavals in the near future, then the demand for real estate in the USA, Europe and other regions will gradually begin to recover, and therefore prices will go up again.
