"Firstinka" is gone, long live rental! Here's what happened in the real estate market in 2024.

2016-2021 were the "golden" years for the residential real estate construction market in Ukraine. During that time, the primary market experienced high demand among homebuyers due to low prices and a lack of alternative financial instruments.

Developers were unable to announce the start of construction for a new residential complex before crowds of eager investors formed outside their sales offices. Developer companies did not have to look for additional sources of funding, as they could always rely on buyers.

However, this carelessness became a fatal mistake for players without accumulated resources. In 2022, the market for new apartments collapsed by 90%, and its recovery has followed a negative trend: by 2024, demand is only one-fifth of the pre-war levels.

In contrast, the rental housing market in Kyiv and in major cities in western and central Ukraine reached its peak in terms of prices in hryvnias. For the first time in history, rental rates for one-bedroom apartments in Lviv and Uzhhorod surpassed those in Kyiv.

"eOselya" did not save the new construction market

As soon as buyers of apartments in the "primary" market stopped closing deals and paused payments on installments, developer companies quickly exhausted their financial reserves. Some developers halted work on construction sites altogether, while others resumed work only on projects with a high degree of completion.

New queues for complexes and new projects were launched only by those companies whose owners allocated their own funds or found external financing. A key factor was geographical – the further a future residential complex was from the border with Russia, the more willingly the developer invested in it.

The number of transactions in the primary real estate market in 2024 was 20% of the figures from 2021, calculated by the National Bank of Ukraine (NBU).

The situation in the primary real estate market could have been even worse if it weren't for the state program of preferential mortgages "eOselya". Since the program's launch at the end of 2022, 14.8 thousand borrowers have taken advantage of it. The total amount of loans issued is 24 billion UAH, of which 14.6 billion was issued in 2024. This is a record amount for Ukraine, as there has never been such a large-scale mortgage program in the country before.

49% of borrowers in 2024 were military personnel and police officers, 7.7% were medical workers, and 7.3% were educators. They received mortgages at an interest rate of 3% per annum. 27.1% of recipients took loans at 7%.

Over 50% of the loans issued were for the Kyiv region – 1.9 thousand loans totaling 4.1 billion UAH were issued in the capital, while 2.3 thousand loans totaling 3.9 billion UAH were issued in the Kyiv region.

In only one-third of cases did the operator of "eOselya" ("Ukrainian Financial Housing Company") support developer companies with state funds: 24.1% of mortgage recipients purchased apartments under construction, while 8.7% bought ready apartments from developers. The remaining 67.1% of loans financed the purchase of housing in the "secondary" market.

According to the NBU, on average across the country, only 4-5% of transactions in the primary real estate market involved mortgages.

On the last day of the year, the government recapitalized "Ukrfinzhitlo" with bonds worth an additional 20 billion UAH, ensuring that the state program will continue in 2025. A source at "Ukrfinzhitlo" explained that if the bond monetization is successful, the company plans to issue mortgage loans worth about 1 billion UAH each month.

He added that in 2025, "Ukrfinzhitlo" will focus more on new housing, particularly those still under construction. Supporting the construction industry was one of the main ideas behind the creation of the accessible mortgage program.

The shortage of housing supply, even amid low demand, has led to an increase in apartment prices. In Kyiv, Odesa, and Dnipro, the average price per square meter increased by 10-14% over the year, according to LUN.

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The leaders in the growth of "primary" housing were Kropyvnytskyi (+33%), Rivne (+24%), Ivano-Frankivsk, Chernivtsi, and Vinnytsia (21%). Meanwhile, in dollar terms, the growth in these five cities ranged from 8-19%.

"Secondary market": good financial conditions, poor security

The demand for residential real estate in the secondary market has recovered to 70% of the levels seen in 2021, according to the latest Financial Stability Report from the National Bank. Over eleven months of 2024, notaries certified 14% more transactions than in the same period in 2023.

An impressive 67.1% of loans issued by "Ukrfinzhitlo" for purchasing apartments in the "secondary" market did not play a key role in its popularity among investors. The average age of residential buildings in Ukraine is about 50 years, while "eOselya" can be obtained for housing that is between three to ten years old.

Secondary housing is popular among buyers due to several advantages: no risk of unfinished construction, existing renovations, a wide selection, and a legally simple purchase process.

Most apartments in the secondary market are purchased primarily for relocating with relatives, changing rented housing for owned property, and improving living conditions, according to research from "OLX Real Estate". Conversely, interest in buying an apartment as an investment is declining.

The most sought-after properties in the secondary market are small, and therefore cheaper, housing. The median area of apartments purchased in 2024 in Ukraine and Kyiv is the same – 48 sq. m, as stated in the NBU report. Meanwhile, according to LUN, the median area of housing available for sale in Kyiv is significantly higher – about 60 sq. m.

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Last year, the average time to sell an apartment in Kyiv ranged from 2 to 4 months, with one-bedroom apartments selling the fastest. The duration of apartment listings allows for assessing the balance between supply and demand, the level of solvent demand, and buyers' agreement/disagreement with market prices, according to LUN.

In Kyiv, the listing period decreased from 53 days in November 2023 to 49 days in November 2024, while in Lviv, it decreased from 62 to 42 days.

In spring and summer 2024, when real estate prices slightly decreased, the listing period for apartments on the market also dropped. This indicates a presence of solvent demand and buyers' readiness to close deals quickly, provided there is a discount from sellers, the company explains.

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The NBU calculated that given the growth in citizens' incomes, the price conditions for purchasing housing today are even more favorable than in 2021. However, potential buyers are deterred from making deals due to security risks.

Adaptation to uncertainty

The rental market feels the most confident: demand is high, rental rates are rising, and the listing period for available apartments is decreasing, according to LUN.

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In 2024, rental prices for apartments increased in line with the cost of the properties themselves. The price-to-rent ratio in Kyiv is 10X. This means that the funds spent on acquiring real estate can be recouped in 10 years.

A higher value of this indicator often indicates the emergence of a price "bubble" in the market, while a lower value may warn of undervaluation of housing or inflated rental prices.

"10X" indicates that buying housing is a good alternative to renting. However, the risks of war have changed the rules of