Demand for housing is growing moderately mainly due to the secondary market, while investment demand and interest in new buildings remains low, according to the Financial Stability Report for June 2024 prepared by the National Bank of Ukraine (NBU).

According to the document presented on Wednesday, in the first quarter of 2024, notaries signed third more residential purchase and sale transactions than in the first quarter of last year. At the same time, the last four quarters of transactions are still a third less than the average before the full-scale invasion.

“The driver of demand remains the desire to purchase finished housing for one’s own needs, mainly on the secondary market. Investment demand remains depressed, as does the demand for real estate on the primary market. Interest in purchasing housing under construction is reduced by long construction periods, high risks of unfinished construction and uncertainty caused by the war,” says the report of the National Bank.

In addition, the supply on the market of new buildings is growing slowly: commissioned objects are usually sold in the early stages of construction, and new construction is practically not starting, except for isolated projects in the western regions of Ukraine, the report notes.

Developers are also experiencing rising prices for construction materials and a shortage of workers due to migration and mobilization.

“The rate of growth of new housing is unlikely to accelerate. The current pause in housing construction may lead to a shortage of supply of new housing after the reduction of war risks and increased demand,” the NBU predicts.

Despite the factors of low supply and demand, housing prices are rising in both the primary and secondary markets. Renting housing is also becoming more expensive. Currently, the average cost of an apartment in the capital is equivalent to 10 years of rent.

“In the future, prices will be supported primarily by the wishes of sellers. In certain segments, this will be facilitated by demand, strengthened by financing under government programs. At the same time, the cost of housing in housing under construction in the early stages or in less safe regions will significantly exceed the level that is comfortable for buyers," the report summarizes.