Experts outline trends on Ukraine's real estate market in 2018 – media

"The market sees an evident oversupply: actual demand is low, while offers are on the rise," Serhiy Kostetsky, an analyst from SV Development, says, as reported by Strana.ua.

A couple of years ago, this trend allowed experts to claim that the "bubble" was inflating in the construction market. It means that the construction is financed with the use of pyramid schemes, that is when buildings with unsold apartments are completed at the expense of funds collected for new residential construction projects.

Read alsoNational Investment Council: 94% of state assets belong to 46 state-run companies"We all understand why the so-called 'smart' apartments [bachelor apartments] were in demand. Banks went bankrupt, while each depositor received compensation as much as UAH 200,000 (US$7,125). Many former depositors invested their money in real estate. So, sales of cheap housing have been growing since 2014," Kostetsky said.

The massive bank collapse in Ukraine is almost over, and Ukrainians again deposit their savings in bank accounts. However, they began to invest in housing less, as growing utility bills do not allow them to earn well from rent.

So the threat that the "bubble will burst" not only exists, but becomes quite real if not this year, then next year, experts say.

According to SV Development, now up to 70% of apartments remain unsold in some newly commissioned buildings. Therefore, the only thing that can force a buyer to invest at the stage of ground works is a super low price. Despite the strengthening of the dollar (and an associated rise in prices of construction materials), experts do not expect a rise in prices of real estate in 2018.

Read alsoFirst deal to buy real estate for crypto currency registered in Ukraine"Yet, prices are unlikely to grow big. There are a lot of old houses in the capital whose owners have long dreamed of moving to new flats. So, as soon as the price of new apartments starts to fall even more, demand will immediately grow, as well as the supply on the secondary market. This, in turn, will reduce prices on the secondary and primary real estate markets," the experts say.

To break out of this vicious circle of dumping prices, developers are looking for other ways to improve the profitability of their business.

In addition, the market is constantly in search of technologies that would reduce the cost per square meter of living space. However, these "technologies" can so far be called "savings on everything" since companies massively use low-cost and low-quality materials, reduce the size of flats, increase the number of apartments per floor, and so on.

In fact, it turns out that in a few years such quickly built new houses look worse than the Soviet-era high-rise panel buildings built several decades ago.

However, Ukrainians still do not want to buy real estate on the secondary market. According to experts, the share of new buildings in the structure of housing sales in Ukraine is constantly growing and already exceeds 50%.

Prices of flats in Khrushchev-era apartment blocks are declining, and according to forecasts, they will fall at least by 10%. Thus, owners of apartments in panel houses will be forced to offer the same discounts to their potential buyers. That is, if now a decent two-room apartment in a residential area in Kyiv can be bought for $30,000-35,000, then its price is expected to drop to $27,000-31,500 by the end of the year. The cheapest Khrushchev-era flats can fall in price to $10,000-14,000, the experts predict.

The situation can change only if banks start issuing loans for housing more actively.