War risks and economic uncertainty are holding back housing investment in Ukraine

Despite the fact that price conditions in the real estate market in Ukraine have become more attractive than before the start of the full-scale war, Ukrainians are still cautious about investing in housing due to war risks. This conclusion was published by the National Bank of Ukraine in its December Financial Stability Report.

NBU experts emphasize that the real estate market has seen a decline in key indicators. For example, the "price-to-rent" ratio has returned to the long-term average level, which makes buying a home more profitable than renting. In addition, the "price-to-income" ratio in Kyiv has reached a historic low: a family can purchase 70 sq. m of housing for the equivalent of its 10-year income.

However, demand for real estate remains moderate and has not yet reached pre-war levels. In a regional context, the secondary market demonstrates different trends. In Kyiv and the western regions, prices are stable, indicating that a certain balance has been maintained. In other regions, there is a decrease in the cost of a square meter due to weaker demand and other local factors.

The primary market, on the contrary, is showing an increase in prices, especially in the western regions, where there is a limited supply of new buildings. The main reason for this is the slowdown in the pace of construction due to a lack of resources, in particular labor. The NBU warns that such a deficit may increase in the future, which creates a risk of a shortage of quality housing.

The report paid special attention to the reduction in the volume of mortgage transactions. In the second half of 2024, the share of such transactions decreased to 4% compared to 5% in the first half of the year. Half of mortgage loans were issued for the purchase of housing in Kyiv and the Kyiv region. The negative dynamics are explained by changes in the terms of the "e-Housing" program and limited resources.

According to the NBU, the development of the real estate market requires the introduction of new, more mass banking products that will stimulate demand. Without such instruments, the impact of current programs on the market will be limited, making it difficult to restore pre-war activity levels.