Apartment musings: Why housing prices are rising in Ukraine and what they might look like in 2025.

The growing popularity of the idea to live in rural areas, away from the hustle and bustle of city life, noise, and shelling, has caused an increase in prices for private homes — they have risen by 16.6% this year, and on average, such a house in a Ukrainian village now costs 2.6 million hryvnias, according to OLX analytics.

The State Statistics Service, in turn, reports the following figures: in the third quarter of 2024, prices increased by 14.1% in the primary market and by 10.5% in the secondary market.

“The cost of building materials has significantly increased due to inflation, logistical difficulties, and limited availability of resources,” explains Vitaliy Shokal, a real estate consultant. “For example, the price increase for materials has been about 35%-45% compared to pre-war levels.”

Ivan Papazov, a real estate market expert, provides his insights: “In the primary market, meaning from the developer, prices are indeed rising, and they will continue to do so — the cost of materials and services is increasing, there is a shortage of male labor, and so on.”

“On the other hand, the situation in the secondary market is somewhat different: right now it’s a ‘buyer’s market’ and the price listed in an advertisement can vary significantly from the actual sale price,” he adds. “This is particularly true for apartments priced at $150,000 and above.”

Analysts from the real estate portal LUN point out that the Ukrainian housing market is currently very uneven in its dynamics.

“In frontline regions, the war is causing further declines in the price of ‘secondary’ housing due to security risks. In large cities in the central and southern parts, such as Kyiv, Dnipro, Odesa, and Zhytomyr, there is an increase in supply, particularly from those who have chosen not to return to Ukraine. In the western regions, demand is driven by the fact that a significant number of people have remained in their hometowns and can plan their future over a longer term,” LUN notes.

Housing construction is resuming

The full-scale Russian invasion in 2022 halted the sharp rise in the supply of new housing, bringing the market to a peak. In 2021, Kyiv alone saw a record 1.97 million square meters of new housing put into operation, according to the State Statistics Service.

This situation was not unique to Kyiv. In Lviv, the real estate market was supplemented with 1.21 million square meters in the same year. The pre-war economy was characterized by strong consumer demand, where wage growth outpaced the rise in consumer prices. Free money was actively invested in housing, and developers rushed to take advantage of the funds available in the wallets and bank accounts of Ukrainians.

Currently, the residential real estate market is reviving again. The capital has received 630 thousand square meters of new residential space over the past two quarters this year, surpassing the figures from 2023 and, obviously, those from the crisis year of 2022.

A similar situation exists in Lviv — 440 thousand new square meters in the first half of 2024. The difference in dynamics with Kyiv is mainly that the Lviv housing industry experienced a lighter impact in 2022, without such a significant drop as occurred in the capital and in the southern and eastern regions.

According to LUN analysts, the most popular option in the capital is a 50 square meter apartment priced at $50,000 in the secondary market. “We do not see any extraordinary shifts in demand; this has always been one of the most popular options,” the company states.

In two companies, Hromadske reported that clients considering purchasing housing pay significant attention to the U.S. presidential race and try to assess the future term of Donald Trump. Some associate it with increased chances of ending the hot phase of the war in Ukraine — and the end of the war would make housing more expensive, especially in the east and south. Others, on the contrary, believe that purchasing housing should be postponed until it is clear what Trump will do regarding Ukraine.

“Buyers are held back more by the factor of uncertainty and the associated fears rather than rational calculations. The new U.S. president will take office on January 20, 2025. By that time, it is quite early to make premature conclusions, even based on the first blitz statements. Therefore, there are all grounds to believe that deferred demand will gradually begin to materialize,” says Marianna Bigunets, sales director at the construction company Gazda.

“The political aspect, namely the U.S. presidential elections and Trump’s potential election, also adds unpredictability regarding the development of military events and, consequently, encourages postponing purchases,” the analysts from the LUN real estate portal add.

Housing inequality

As of the third decade of November, new housing prices in Ukraine have increased the most in Rivne, rising by 8% over 6 months and reaching $920 per square meter, according to LUN analytics. Another price increase champion is Uzhhorod, with a 6% rise, where one new square meter now costs $1,170. The city attracts residents with its safety and proximity to EU and NATO countries. The cost of housing in the primary market of Cherkasy has also risen by 6%. Prices in Kyiv have increased by 2%.

In the secondary real estate market, Rivne remains the leader, where housing prices have risen by 14%, while in Lviv, they have increased by 5%, and in Uzhhorod and Ivano-Frankivsk, by 3%, according to LUN.

“The rise in the price of new housing is driven by complications in logistics and a labor crisis in hiring construction personnel. The latter is caused by population migration and the mobilization campaign,” comment the analysts from the LUN real estate portal.

In Zaporizhzhia, new apartments have decreased in price by 15%, in Kropyvnytskyi by 10%, and in Kharkiv by 4%. The same comparative rates of decrease are occurring in these cities for the ‘secondary’ market. Apartments in these areas are now more affordable than they have ever been before the full-scale invasion, but this advantage will only play out positively when regular shelling in these regions ceases. If the security situation improves, reselling such an apartment will bring significant dividends to the owner. Thus, such housing is an option for those who choose to take risks.

OLX provides its data, which confirms the rise in housing prices in relatively safe regions. According to this data, in Kyiv, the average price of an apartment in a new building is 3.7 million hryvnias (+8.3% since the beginning of the year), in the secondary market — 4.5 million hryvnias (+7.3%), and for houses — 8.6 million hryvnias (+17.7%).

As for Lviv, prices for apartments in new buildings have been rising throughout the year, and in November, the average price is 3.5 million hryvnias (+10% since the beginning of the year). In the secondary market, it’s 3 million (+9%). For houses, the price is 7.2 million (+24.4%).

“Housing prices in Ukraine right now resemble the ‘average temperature in a hospital,’ as they have significantly risen in western Ukraine while experiencing a substantial drop in the eastern part. Kyiv is trying to remain relatively stable, but even here things are not so straightforward,” says analyst Ivan Papazov.

What exactly is ambiguous in the capital market is explained by analysts from the LUN real estate portal: “Power outages in the summer noticeably reduced the number of those willing to purchase housing right now. At the same time, interest in real estate has not significantly decreased, leading to the conclusion that the market has enough potential demand, but unpredictable future factors are hindering purchases at the moment.”

Real estate consultant Vitaliy Shokal explains that as a result of military actions, many Ukrainians are relocating to western regions and large cities such as Kyiv or Lviv, which creates increased demand in the market. “We constantly observe this in our daily practice. A significant number of people from frontline areas are buying housing, renting, relocating businesses, and renting or purchasing commercial spaces and warehouses,” says Shokal. “For example, my colleagues and I in Kyiv have recently rented out many warehouses to companies from regions like Kharkiv, Zaporizhzhia, Kherson, and Dnipro. Clients from these regions frequently come to rent or buy property in the capital.”

According to the construction company Gazda, since the beginning of the full-scale invasion, the cost of building materials and construction and installation works has increased by at least 15-17% annually. This trend is currently ongoing and is expected to continue into next year. The depreciation of the hryvnia against the dollar and