Housing prices in large cities of Ukraine dropped 30-40%

Apartment owners are forced to reduce prices due to the sharp drop in sales

Photo: Konstantin Melnitskiy

Pessimism reigns on the real estate market of the country’s largest cities. The demand for apartments decreased in all regions of Ukraine, although there are peculiarities in each of them. The housing prices in some cities with a population over a million are supported by the mass resettlement of residents of the Donetsk and Luhansk oblasts, while in others apartment owners are forced to make concessions for buyers due to the mass withdrawal of investors.

Prices of apartments will fall

In January-September, the prices of apartments on the secondary market dropped on average 20-25% in all large cities of Ukraine. At the start of the year a two-room apartment in a building of the Khrushchev period in the Big Fountain district in Odesa cost US $45,000, while today it costs US $39,000, says agent of First Realtor Company Iryna Tsvyhun. A one-room apartment in the same district in October cost US $25,000 instead of US $38,000.

A one-room economy class apartment in Lviv can be purchased for US $40,000-42,000, while at the beginning of this year the prices were US $50,000-52,000, realtor of the Vezha Agency Lyudmyla Kryzhanovska told Capital. Two-room apartments fully refurbished and furnished cost US $50,000, while nine months ago the seller would ask US $63,000.

In Dnipropetrovsk, the cheapest one-room apartment can be purchased for US $18,000 and a two-room apartment located close to the city center for US $28,000, says General Director of the 22 Century real estate agency Vitaliy Nazarov.

Also, the prices of apartments in Kharkiv are falling. A specialist of the Kharkiv Real Estate Agency Yuriy Us explains that apartments located on the top floor of a five storey building were always sold for less than the average market price. Now they can be purchased for US $23,000, while at the start of the year they cost US $30,000. “In Zaporizhzhya, a two-room apartment located close to the city center was sold for US $29,000, although it was put up for sale for US $36,000,” tells Director of the Arta Agency Viktoriya Shakhmayeva.

This price trend is being observed for the first time over the past five years, while last year apartment owners rarely agreed to reduce their price by more than US $1,000.

The prices of apartments in Donetsk, which is not currently controlled by the Ukrainian government, dropped even more. For instance, in January-February a two-room apartment in the oblast center cost US $100,000, while today it can be bought for US $35,000. Second-hand dealers appeared in the city ready to purchase apartments at extremely low prices – US $10,000-15,000.

The situation on the primary real estate market is different. Unlike in Kyiv, developers in the regions did not risk raising prices in the national currency. For instance, in Odesa apartments in the Prymorskiy district cost UAH 12,000 per square meter and on the outskirts – UAH 9,700/sq m.

In Dnipropetrovsk, new apartments cost on average UAH 10,500 per sq. m. and in Lviv – UAH 11,000-12,000 per sq. m. Kharkiv is the only city, where the prices of apartments increased by 10-15% and at the moment they are being offered for UAH 8,000-9,000 per sq. m.

Demand dropped

Apartment owners are forced to reduce prices due to the sharp drop in sales: in January-October the number of buy-sell deals dropped by three-five times, according to the estimates of local realtors. There are no official statistics for the sales of apartments in the regions.

“The market came to a standstill in the middle of August, as many potential buyers feared that the hostilities would start in Zaporizhzhia,” says Shakhmayeva. Second-hand dealers and buyers of apartments for their further lease left the market in Odesa, Tsvyhun noted. Many businessmen do not understand what the prices of real estate will be next year and are afraid to invest money. “Before the start of the military conflict in the east of the country second-hand dealers accounted for every third deal,” she explains. The hopes on forced migrants, the majority of which prefer to rent and not buy apartments, were also not justified, says Us.

In Kharkiv the prices increased only for a number of objects on primary real estate market, says Director of the Dukat Agency Stanislav Dmytrychenko. New apartment buildings in the bedroom community Saltovka and in the northwest district of Oleksiyivka were commissioned this year. The prices there increased by 15% to UAH 11,000 per square meter,” he said.

There are practically no sales in Donetsk. It is impossible to cut a deal in the city as the State Registration Service closed access to its registers in populated areas that are not controlled by the Ukrainian authorities. According to the National Security and Defense Council, activists of the self-proclaimed Donetsk and Luhansk people’s republics control Donetsk, Luhansk and adjacent cities: Alchevsk, Debaltsevo, Rovenki, Krasnodon, Amvrosiyevka and others. For the registration of a deal the buyer and seller must travel to other regions.

Prices stabilized

Though prices will not change, apartment owners are prepared to offer discounts, believes Dmytrychenko. For instance, the discount for an apartment priced at $30,000 could be as high as US $2,000. Developers will continue to hold the prices hoping for the pre-holiday demand.

On those territories that are not controlled by the Ukrainian government, the prices of apartments will drop two-three times, believes Head of the Association of Bank Appraisal Specialists Serhiy Frolov. “The authorities of the self-proclaimed republics already announced that the housing of forced migrants could be nationalized,” he says. As a result, many apartment owners will try to sell their property and move to other regions of the country.