Ukraine is entering a housing crisis: UN findings confirm forecasts of the Ukrainian Association of Developers
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The housing market is moving to a point where demand will exceed supply by a factor of many. This has been repeatedly stated by the Ukrainian Association of Developers, and now this trend is officially confirmed by the UN in a report by the International Organization for Migration (IOM). The data of international analysts show that the housing crisis in Ukraine has ceased to be a forecast and has become a reality.
What is the UN talking about?
The scale of destruction and loss of housing in Ukraine is enormous. More than 236,000 buildings have been completely destroyed, and another 2.5 million are damaged or uninhabitable - about a tenth of the country's housing stock. Of the 3.7 million internally displaced Ukrainians, most cannot afford to pay for housing on their own. As a result, families who rent an apartment spend more than 50% of their income on rent, making housing effectively unaffordable for a large part of the population.
This is because the housing crisis in Ukraine arose for several reasons:
- First of all, there is almost no municipal housing in the country that could be useful for people who have lost their homes.
- The rental market also works chaotically: it is practically unregulated, so prices are rising rapidly and without any rules.
- Added to this is the large-scale migration - millions of Ukrainians were forced to move, and this put enormous pressure on the market.
- And most importantly, the war destroyed and damaged a huge number of houses, so there is physically much less housing than people need.
What did the UAA warn about?
The URA's analysis over the past four years clearly shows that the housing that is currently being put into operation is projects launched before 2022. There are practically no new starts, and this is what creates the greatest risk for the coming years.
The graphs show a growing gap between the number of completed construction projects and the number of new starts. In other words, we are completing old projects but not launching new ones. This means that in one or two years there will simply not be enough apartments for sale and rent on the market.
Amid growing demand, this will inevitably lead to an increase in the cost per square meter. If the trend does not change, the country will face the largest shortage of new housing in all the years of independence.
What to do to avoid a deep housing crisis
UBA analysts have repeatedly emphasized that the housing market will not recover by itself. We need thoughtful solutions that will allow us to launch new construction projects and increase supply.
It is about making the permitting process faster and clearer for developers, creating convenient project financing mechanisms, modernizing government support programs that help people buy housing, and more actively attracting foreign investment. Without this, the gap between supply and demand could reach a critical point as early as 2026.
"If we don't start new construction now, then in two years there will simply not be enough housing in the country - neither for sale nor for rent. This is not an assumption, but an obvious result of what we see on the market now," says Yevhen Favorov, chairman of the Ukrainian Association of Developers.
The key task for the coming years is to create conditions in which developers will be able to safely launch new projects and Ukrainians will have real options for renting and buying housing. Otherwise, the housing market will remain an area where the crisis has already occurred, and its worst consequences are only approaching.
The role of developers in overcoming the crisis: why the market will not start without them
No program or initiative can overcome the housing crisis without a recovery of the construction industry. It is developers who create the supply that is critically lacking now.
After 2022, the industry operates in an environment of high risks, limited funding, and complex regulatory procedures. Most companies were forced to complete old projects without being able to start new ones. Developers face the same barriers: lengthy permits, lack of credit, lack of clear rules for working with banks, and difficult conditions for attracting investment.
If developers do not have predictable conditions, they cannot plan the launch of new buildings. This means that housing does not appear on the market, the shortage deepens, and prices rise. That is why the EBA calls for a comprehensive approach: we need not only eOselya or support for tenants, but also systemic favorable conditions for developers.
