The period 2016-2021 is the "golden" era of the residential real estate construction market in Ukraine. At that time, the primary market was in high demand among home buyers due to its low cost and the lack of alternative financial instruments.
Developers did not have time to announce the start of construction of a new residential complex, as queues of people willing to invest formed near the sales departments. Development companies did not have to look for additional sources of financing, because they could always count on buyers.
Frivolity became a fatal mistake for players without accumulated resources. In 2022, the market for new apartments collapsed by 90%, and its recovery followed a negative scenario: in 2024, demand is one fifth of the pre-war level.
In turn, the housing rental market in Kyiv and major cities in the west and center of Ukraine reached its maximum values in hryvnia prices. For the first time in history, rental rates for one-room apartments in Lviv and Uzhhorod have surpassed those in Kyiv.
"eOselya" did not save the new construction market
As soon as buyers of apartments in the "primary" stopped concluding deals and suspended payments on deferred payments, development companies quickly exhausted their financial reserves. Some developers stopped work on construction sites altogether, while others resumed work only on objects with a high degree of readiness.
New phases of complexes and new projects were launched only by those companies whose owners had allocated their own funds or found financing "on the side". The key factor was geographical - the further the future residential complex was from the border with Russia, the more willing the developer was to invest in it.
The number of deals on the primary real estate market in 2024 was 20% of the indicators in 2021, the National Bank (NBU) calculated.
The situation on the primary real estate market could have been even worse if there had not been a state preferential mortgage program "eOselya". Since the start of the "e-Shelter" program at the end of 2022, 14.8 thousand borrowers have used it. The total amount of loans issued is UAH 24 billion, of which UAH 14.6 billion in 2024. This is a record amount for Ukraine, because previously there was no such massive mortgage program in the country.
49% of borrowers in 2024 were military personnel and police officers, 7.7% were doctors, 7.3% were teachers. They took out a mortgage at 3% per annum. 27.1% of recipients took out a loan at 7%.
The Kyiv region accounted for more than 50% of the loans issued - 1.9 thousand loans for UAH 4.1 billion were issued in the capital, and 2.3 thousand loans for UAH 3.9 billion in the Kyiv region.
Only in a third of cases did the operator "eOseli" ("Ukrainian Financial Housing Company") support developers with state funds: 24.1% of mortgage recipients purchased apartments under construction, another 8.7% - finished apartments from the developer. The remaining 67.1% of loans financed the purchase of housing on the "secondary" market.
According to the NBU, on average across the country, only 4-5% of transactions in the primary real estate market were concluded with the involvement of a mortgage.
On the last day of the year, the government recapitalized "Ukrfinzhytlo" with bonds for another 20 billion UAH, so the state program will continue in 2025. The EP's interlocutor at "Ukrfinzhytlo" explained that in the event of successful monetization of the bonds, the company plans to issue mortgage loans for about 1 billion UAH every month.
He added that in 2025, Ukrfinzhytlo will focus more on new housing, in particular that which is still under construction. Supporting the construction industry was one of the main ideas behind the creation of the affordable mortgage program.
The shortage of housing supply even with low demand led to an increase in apartment prices. In Kyiv, Odessa and Dnipro, the average price per square meter increased by 10-14% per year, according to LUN.
The leaders in terms of housing growth rates in the "primary" market were Kropyvnytskyi (+33%), Rivne (+24%), Ivano-Frankivsk, Chernivtsi and Vinnytsia (21%). At the same time, in dollar terms, the growth in these five cities was 8-19%.
Secondary real estate: financial conditions are good, security conditions are bad
Demand for residential real estate on the secondary market has recovered by 70% from 2021 levels, according to the latest Financial Stability Report of the National Bank. In the eleven months of 2024, notaries certified 14% more transactions than in the same period in 2023.
An impressive 67.1% of loans issued by Ukrfinzhit for the purchase of apartments on the "secondary" market did not play a key role in its popularity among investors. The average age of a residential building in Ukraine is about 50 years, while "eOselya" can be obtained for housing aged from three to ten years.
Secondary housing is popular among buyers due to a number of advantages: no risk of unfinished construction, availability of repairs, a wide choice, and a legally simple purchase procedure.
Apartments on the secondary market are purchased mainly for the purpose of settling with relatives, changing rented housing to their own, and improving living conditions, according to the results of research by OLX Real Estate. Instead, interest in buying an apartment as an investment is weakening.
The greatest demand on the secondary market is for small, and therefore cheaper, housing. The median area of apartments purchased in 2024 in Ukraine and Kyiv is the same - 48 sq. m, the NBU report says. At the same time, according to LUN, the median area of housing available for sale in Kyiv is noticeably higher - about 60 sq. m.
Last year, the average time to sell an apartment in Kyiv was from 2 to 4 months, with one-room apartments selling the fastest. The duration of the apartment display makes it possible to assess the balance between supply and demand, the level of solvent demand, and the agreement/disagreement of buyers with market prices, LUN says.
In Kyiv, the exposure period decreased from 53 days in November 2023 to 49 days in November 2024, in Lviv – from 62 to 42 days.
In the spring and summer of 2024, when real estate prices decreased slightly, the exposure period of apartments on the market also decreased. This indicates the presence of solvent demand and the willingness of buyers to quickly conclude a deal provided that the sellers offer a discount, the company explains.
The National Bank considered that, given the growth in incomes of the population, the price conditions for purchasing housing today are even more favorable than in 2021. However, potential buyers are deterred from transactions by security risks.
Adapting to uncertainty
The rental market feels the most confident: demand is high, rental rates are growing, the exposure period of vacant apartments is decreasing, LUN says.
In 2024, the cost of renting apartments increased in proportion to the cost of the housing itself. The price-to-rent ratio in Kyiv is 10X. This means that the funds spent on purchasing real estate can be returned in 10 years.
A higher value of this indicator often indicates the emergence of a price "bubble" in the market, while a lower value may warn of an underestimation of the cost of housing or an overestimated rental cost.
"10X" means that buying housing is a good alternative to renting. However, war risks have changed the rules of the game: the population is not ready to invest in purchasing housing on the same terms as before," the NBU Financial Stability Report says.
The choice in favor of renting is the Ukrainians' response to uncertainty due to Russia's long-term war against Ukraine.
On average, an announcement for a long-term apartment lease in Kyiv closes in 7 days (a year ago it was 10 days), in Lviv - 14 days (it was 20), in Odessa - 12 days (it was 11).
The LUN suggests that the increase in rental rates during 2024 in almost all cities of Ukraine may encourage an increase in investment demand for apartments. And real estate sellers may think about their "re-profiling" to potential landlords.
What to expect on the real estate market in 2025
Given the rise in the price of building materials and the increase in wages due to a labor shortage, prices in the primary market will increase, especially in Kyiv and Lviv — cities with high levels of migration and investor interest.
The long-term rental market is likely to continue to grow due to population migration to safer regions and uncertainty that forces potential buyers to choose renting over buying. Increased demand amid reduced supply will lead to an increase in rental prices, especially in the western and central regions.
In 2025, the number of offers on the rental market may increase if sellers, having failed to find buyers, decide to rent out real estate at least to cover utility costs, and at most to make a profit.
Demand for daily rentals will also grow, especially in the summer, due to domestic tourism, business trips, and reunions of families separated by war.
The key factors that will drive the market in 2025 remain security, stability of the energy sector, the economy, and the solvency of the population.
Overall, 2025 will be a year of cautious market recovery, which will depend on economic and social stability, investor confidence, and the situation on the front.
