Yevhen Favorov: "Housing is an important front in the war for people"
2024 was a year of new challenges. There were many chances this year that, although not fully realized, remain a powerful potential for the next steps forward. Summarizing the year's results, I would like to look back on the events rather than draw attention to the unrealized opportunities that should become an incentive for future development. We live in a time when every step we take, whether it is an active action or an opportunity that is still waiting to be realized, forms the foundation of tomorrow.
Housing is an important front in the war for people
Unfortunately, 2024 was not the year of expected changes in the housing market. The development of the industry and the provision of apartments for people who have lost their homes are still without a clear strategy. In the third year of the war, the country continues to be guided by the outdated Soviet Housing Code, without a modern roadmap with specific steps, construction volumes and realistic deadlines.
The situation is not easy: construction volumes have halved compared to the pre-war years, which clearly reflects the current state of the market. Added to this is the fact that Russia has destroyed 1.5 million apartments, according to KSE. This has further aggravated the already critical housing situation, as in 2021 Ukraine ranked last in Europe in terms of the number of square meters per person.
Today, this is not just an economic or social problem, but an important front in the war for people, and unfortunately, we are losing on it. More than a million people are forced to stay in the frontline areas, and hundreds of thousands are returning to the occupied cities due to lack of housing. The problem is being voiced, but no real action has been taken by the government so far.
At the same time, the creation of a social housing fund, the launch of social lease, lease with the right to purchase, and a special subsidy for rental housing still exist only in the form of draft documents that have not been decided on for quite some time. The subsidy project has been "finalized" for several months to be submitted to the Government, while the rest of the instruments are provided for in the draft law "On the Basic Principles of Housing Policy," which is still being worked on. And it can take a long time - the draft law is being developed in accordance with the requirements of the Ukraine Facility program and may come into force only at the end of 2025. And the legislation on social housing stock may be delayed until the end of 2026.
The successes of eHouse
If we return from wishes to reality, 2024 for the housing market was marked by the eOselya mortgage program. It has undergone significant changes, and this work continues, including with the active participation of our association. This program, of course, will not replace the systemic mass mortgage, but eOselya has increased its momentum, remaining the only driver of the construction sector. This year, more than half of all loans since its launch have already been issued under the program - for more than UAH 14.5 billion. More than 8.5 thousand homes have been purchased, almost a quarter of which were from developers. At the same time, only 5% of apartments under construction are purchased.
We can probably expect this dynamic to increase next year. Yevhen Metzger, the head of Ukrfinzhytl, has already said that the company plans to raise funds to finance the program from international financial institutions. And the state budget for 2025 provides an additional UAH 9.4 billion for it.
No changes on the construction front
The overall situation in the real estate market did not change significantly over the year: it is in crisis, but it is holding on. None of the large system developers left the market, although the dynamics of their work varies depending on their capabilities. We will receive full year-end market statistics only in the spring of 2025, but we can already draw more or less final conclusions based on the available data from the State Statistics Service. This year's construction volumes remain at the same level as last year. Developers are fulfilling their obligations to investors and finding opportunities to complete projects started before the war, even in the face of rising costs, staff shortages, limited demand, and lack of government support.
At the same time, new projects are being launched less and less frequently for the same reasons. Their number has fallen by 4 times compared to the pre-war year, and even compared to last year, the negative trend continues. If this trend continues, we will soon face the devastating consequences of the slowdown in construction - a shortage of new housing and an inevitable rise in its cost. We can already see that on average, the price of primary housing rose by 14.1% over the year, and this is still a moderate increase, at the level of the previous year. In my opinion, the upward trend will continue next year, and given the large pent-up demand and improved consumer sentiment, it can be much more dynamic.
What's next
Instead of making predictions, I would like to wish our state to work more actively next year to provide housing for millions of citizens in need. People will not wait for years - if nothing is done, they will look for a better life elsewhere.
I don't want to talk about the problems for a long time, we have written about them a lot throughout the year: These include outdated master plans, ineffective legislation in the field of cultural heritage protection, which does not contribute to its preservation but allows manipulating public opinion, and pseudo-activists who have been "grazing" around legitimate construction sites for years, complicating the work of developers and scaring away potential international investors from Ukraine... This is a rather long list, so let's focus on those things that can contribute to the development of the industry.
First, today, more than ever, we need leadership from the state, a consistent and proactive position that results in specific plans: the scope and timing of construction for at least the next 10 years. And most importantly, we need people responsible for fulfilling these goals. In my opinion, it is the state's need to achieve its goals that can be the first step towards overcoming problems and creating new opportunities.
Secondly, it is modern financial instruments, such as project financing for construction and mass mortgages, which we do not currently have. This is an opportunity to attract long-term debt financing for large projects. The availability of such instruments is a prerequisite for ensuring business stability and customer safety.
In addition, digitalization: we still do not have a unified digital housing construction system that would not only focus on creating registers, but also provide transparent and comprehensive information about construction projects, market offers, companies, have modern analytical functions, and be focused on ensuring trust in the market and interaction with the end buyer.
Finally, there is a shortage of skilled workers now more than ever. The government, educational institutions, and businesses need to work together to create training programs that meet market needs and help train enough specialists.
There is still a lot of work to be done, and no one will do it for us. And as the head of the association, which unites most of the capital's developers and a significant part of construction companies in Ukraine, I assure you that our members, who continue to work despite all the challenges, are ready to join the process and lend a hand in rebuilding a better country for everyone.
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