5 Ukrainian cities where real estate goes up in price most rapidly. Why and what to happen to prices next

Author

Lesia Solovchuk

2021 became a year of rapid growth in real estate prices: on average, a square meter has risen in price by 25-30%. Flats went up in price both in Kyiv and in other regions.

Most experts believe that the price peak passed at the end of autumn—Ukrainians are simply not ready to pay more for housing. However, the unstable economic situation, inflation, and the coronavirus pandemic can make their own adjustments.

According to the analysts of the service vn.com.ua, as early as mid-autumn last year, user and investment demand dried up: the buyers’ activity decreased by 20%. This trend continued until the end of 2021 and, as analytics show, continues in January.

Results of 2021. Prices in Kyiv and other cities of Ukraine

According to the analysts, the prices for the properties recently put into operation have increased more because in terms of investment real estate in the primary market has always been more attractive than in the secondary market.

The highest ascending price dynamics is expectedly recorded in the capital. If at the beginning of 2021 the minimum cost per square meter in Kyiv started from 19,500 UAH, then at the end of the year it was 23,000 UAH. The average price of a square meter was 28,000 UAH in January and 35,000 UAH in December.

The rise in price of primary real estate in other million-plus cities was no less dramatic. For instance, the average cost per square meter at the beginning and end of 2021 was:

in Kyiv: 28,000 UAH—35,000 UAH;
in Lviv: 24,000—28,500;
in Odesa: 23,000—27,000;
in Dnipro: 23,500—28,000;
in Kharkiv: 20,500—24,500.

For example, one-room housing in an economy-class residential complex in Kyiv will cost from one million UAH. In Odesa and Dnipro, such a flat will cost 750,000-800,000 UAH, in Lviv—from 800,000 UAH, in Kharkiv—600,000-650,000 UAH.

Why did prices rise?

The trend in price dynamics was outlined back in 2020—at that time the flats went up by 10-15%, but 2021 broke all records because the cost of a square meter in new buildings increased by an unprecedented 30%. Developers explained the jump in prices with:

growing demand
an increase in the cost of metal and, as a result, all building materials;
increase in salaries of workers involved in the construction of facilities;
inflation;
exchange rate fluctuations of the dollar.

Analysts attribute considerable interest in housing to the fact that last year Ukrainians actively bought flats not only for living but also as an investment for the future. Amid the distrust in the domestic banking system and low interest rates on deposits, the purchase and sale transaction became an opportunity to save and increase what was earned. In this regard, the greatest demand was for one- and two-room properties that are easier to rent out or sell after some time and make good money.

As Lev Partskhaladze, former Deputy Minister of Regional Development, President of the Confederation of Builders of Ukraine (CBU), notes in a commentary to , the pandemic has greatly changed the market, in particular, in the demand for quality housing.

"At first, development companies had fears that sales would fall after the lockdown. But it happened in a different way. People, in the face of falling bank rates and the influence of the uncertainty factor due to the pandemic, began to invest more in housing. Amid rising prices for building materials, housing prices rose significantly last year. In 2021, prices in Ukraine increased on average from 10% to 30%. In addition, the quarantine made us think about the quality of living in the flat—people began to give preference to better housing conditions, infrastructure, and closeness to nature," the expert notes.

Secondly, according to Partskhaladze, construction began to develop rapidly in the Kyiv region—20,000 apartments were commissioned there last year, and about 35,000 in Kyiv itself. For comparison, in 2020, about 37,000 were commissioned in the Kyiv region. In addition, for the first time in many years, such a segment as cottage construction and townhouses has become more active. Country real estate has become very relevant.

"We hope that in 2022 the sales trend in the market will not be worse. Investing in real estate remains a priority for investment," the President of the CBU emphasizes.