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The residential real estate market in Ukraine remains in deep crisis, and signs of its recovery are very weak. A situation has arisen when renting housing has become much more attractive than buying it, the National Bank noted in a recent report on financial stability.

There is almost no mortgage market in Ukraine (less than 250 loans were issued during the year of the full-scale war), and the work of state support programs is unstable.

The central bank predicts that under such conditions, the demand for housing will remain suppressed for a long time due to the war, falling incomes, and significant emigration.

Nearly 25,000 new apartments entered the Ukrainian market in the first quarter of 2023. However, most of this construction began prior to Russia's full-scale invasion, indicating that new building activity is decreasing.

"Since the housing stock is decreasing due to destruction, and new projects are starting less and less, it is becoming increasingly likely that there will be a shortage of supply in the housing market in the long term," predicts the NBU.

At the same time, the regulator points out that the prices for residential real estate, which are set by sellers, do not correspond to market realities. As evidence, housing prices in the ads for which apartments were sold were 25% lower than the average for all ads.

"The fact that prices on the real estate market are far from their natural level, supported by market factors, is also evidenced by the price-to-rent ratio. It will continue to be almost twice the historical average. Leasing conditions are more attractive than acquisitions, which will continue to restrain the purchasing activity on the housing market," the report says.

This means that at current housing prices, renting an apartment for more than 17 years in a row is more profitable than buying it.

Over the past six months, housing rental prices have remained stable, but their change since the start of the full-scale war has been uneven across regions. Rent in Kyiv is on average a third cheaper than the pre-war level, but in Lviv the price is almost twice as high as at the end of 2021.