Owners of housing are banking on forced immigrants and holding back the prices

Photo: Ukrainian photo

In the period from January to June, the number of transactions for the purchase and sale of housing in different regions of the country dropped seven-ten times compared to the same period last year, according to the data of realtors and developers asked by Capital. In Kyiv 3,200 transactions were registered in the specified period, which is 3.3 times less than in the same period of last year, according to data of the SV Development Consulting Company. “For instance, in July 642 purchase/sale agreements were concluded, while in the same month of 2013 a total of 2,300 deals were made,” says Senior Real Estate Specialist of the company Serhiy Kostetskiy.

The situation in the regions is even worse. For instance, in Dnipropetrovsk, the number of deals dropped tenfold, says Director of the Real Estate Agency Prospekt Yuriy Alekseyenko. “You can’t say there are no buyers at all. Not only local residents, but also forced immigrants from Donbas purchase housing,” adds Alekseyevnko. In Odesa, Kharkiv and Zaporizhzhya, sales fell five-seven times. The situation is best in Lviv. Director of the local agency Instate-Exclusive Yevhen Myshanchuk stated that sales dropped three-four times in January-July compared with last year.

Hope for the forced immigrants

A practically total absence of potential buyers is not forcing sellers to make concessions. “Over the past twelve months the prices of housing have not changed,” says Kostetskiy. The maximum discount that sellers are willing to offer in most cities is 10-15%. For instance, the cheapest one-room apartment in bedroom communities in Lviv can be purchased for US $33,000-35,000, in Odesa – US $35,000-36,000, Dnipropetrovsk - US $27,000-29,000, in Kyiv - US $45,000-46,000, Zaporizhzhya - US $17,000-26,000, Kharkiv - US $25,000-30,000. A large discount can be expected only in the event that a seller needs to sell the real estate within a week or two.

Deceitful expectations

Owners of residential real estate, both on primary and secondary markets, are hoping that the cities of Ukraine will be flooded with potential buyers from the Donetsk and Luhansk oblasts, says Vice President of the Association of Professional Real Estate Managers Anatoliy Topal. “One owner wanted to reduce the price of his apartment, but I advised against it as that would raise the suspicion of buyers,” says Myshanchuk.

These hopes, however, are not justified. Many forced immigrants travel to Mariupol, but nevertheless, even there the number of transactions dropped tenfold over the specified period. “I’m seeing such a sharp decline in demand for the first time in the 15 years of my work,” complains the director of the local real estate agency Kvadrat Roman Hryshchuk. The majority of people have no money for purchasing an apartment, explains the director of the Dnipropetrovsk real estate agency Materik Vyacheslav Kozachenko.

An employee of one of Donetsk companies told Capital that he is trying to find housing for several hundred workers in the cities, where there are no combat actions. He expected to reach an agreement with developers on leasing of apartments in finished buildings with consecutive buy-out. The developers, however, are not even willing to consider such an offer.

Developers and realtors asked by Capital could not give a forecast of prices until the end of the year. However, if the demand does not pick up, the prices will gradually begin to slide.

Rentiers are rubbing hands

Rental market is benefiting from the mass migration. For instance, there are practically no available apartments for rent in Mariupol, Zaporizhzhya and Dnipropetrovsk. “If the apartments become available, there are several potential tenants at once. The rent is actually auctioned off,” says Alekseyenko. This caused a surge in rental rates by 1.5-2 times. For instance, in Odesa a one-room apartment on the outskirts of the city can be rented for UAH 2,500-3,000 per month (UAH 1,600-1,800 in the same period last year) and in Dnipropetrovsk – from UAH 2,500 per month (UAH 1,800-2,000 last year).