Housing prices in the primary market will continue to rise after the coronavirus crisis, while demand will remain stable, according to the financial stability report of the National Bank of Ukraine (NBU).
According to the report, prices for new housing in hryvnia equivalent after a temporary fall returned to pre-quarantine rates. At the same time, as of the end of May, prices increased by 9.1% compared to last year.
“It is expected that prices will continue to increase slightly, slightly warmed by the weakening of the hryvnia and low margins of developers. Developers are also optimistic: almost half of developers surveyed in May expect housing prices to rise, which is twice as much as the February quarantine rate,” the document says.
At the same time, housing rental prices fell, which, combined with a sharp slowdown in household incomes, stopped the growth of housing affordability for the first time in ten years, the regulator noted.
In general, the demand for housing will not change in the next two years, according to the NBU. However, quarantine contributed to its transformation: interest in projects of the economy class sharply decreased, investors prefer objects of increased comfort.
“The coronavirus crisis was a stress test for developers. Since the construction sector was not subject to quarantine restrictions, the current construction was affected by an exceptionally sharp short-term drop in demand. About 20% of the facilities were temporarily frozen, primarily due to the insufficient liquidity reserve of developers, mainly in the economy segment,” the report says.
According to the NBU, the mortgage portfolio in January-April decreased by 1.5% due to the atypically low level of lending in April. However, the regulator predicts a further increase in the share of mortgage due to lower interest rates and measures to protect investors, in particular, changes to the rules for registration in mortgage housing.
