Construction is slow, but demand is high: Ukraine faces a shortage of new apartments even with government assistance
18 May 14:05
ANALYSIS FROM 
In Ukraine, not only is the demand for housing on the rise, but so are housing prices. "Komersant Ukrainian" investigated how this is affecting the pace and scale of construction.
In March 2026, compared to March 2025, the total volume of construction in Ukraine decreased by 9.4%. Residential construction saw the sharpest decline—16.2%. At the same time, compared to February 2026, construction volumes rose by 32.3% in March of this year. These are the figures from the State Statistics Service, and they clearly confirm the mixed trends currently observed in the construction industry.
Prices are putting pressure
The Ukrainian construction market has reached a point where not only is the country’s need for new housing and reconstruction growing rapidly, but the cost of construction continues to rise simultaneously. Moreover, this is happening across nearly all key sectors, as developers operate amid labor shortages, expensive financing, an unstable exchange rate, and rising costs for logistics, energy resources, and building materials. Against this backdrop, the market faces the risk of a slowdown in new construction, despite critical demand for new housing and the massive needs of future reconstruction. This is how the current situation is assessed by the Confederation of Builders of Ukraine. Anna Laevska, CEO of SIGMA+ and Chair of the Confederation’s Development Committee, continues:
“The mixed dynamics demonstrated by the market are evident in the fact that, on the one hand, developers continue to announce the launch of new projects, and the number of residential properties for sale is gradually increasing. On the other hand, the actual volume of housing commissioned has not yet shown stable growth. For example, in 2024, 9.7 million square meters of housing were commissioned in Ukraine, and in 2025, approximately 9.5 million square meters. In other words, the market has essentially remained at the previous year’s level or shown a slight decline. At the same time, due to rising costs of labor and materials, the total value of construction work completed continues to grow. In 2025, this figure increased by more than 10% compared to 2024 and nearly reached the 2021 level. In other words, construction has become more expensive, even if the physical volume of construction is not increasing significantly,” the expert explains.
Manufacturers of construction materials note that prices for their products have risen by 20–25% since the beginning of 2026. Rising costs for logistics, energy, and labor have played a role. Developers, however, cannot afford such a rapid price increase. And this mismatch is creating another interesting trend in the market. Anna Laevska explains.
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“Analytical data indicates that there is a certain time lag between the rise in prices for construction materials and its direct impact on construction costs. This is primarily due to the fact that construction companies, especially in the residential real estate sector, cannot always raise prices above current demand, sometimes even at the expense of their own profitability. According to statistics, in 2025, construction materials, depending on the category, became more expensive by an average of 15–38%. At the same time, the cost per square meter of residential real estate has increased by approximately 15% in hryvnia terms. In other words, the cost of construction is rising faster than developers can raise housing prices. Companies are effectively absorbing part of this burden by reducing their own profitability,” the expert notes.
Moreover, she says, construction companies today cannot use the tools that were available in the past, when a stable cash flow allowed them to purchase building materials in advance and thus reduce their dependence on rising prices. This is currently impossible, both due to a lack of financial resources and the inability to safely store such materials. Another factor negatively affecting the construction industry as a whole and construction rates in particular is the existing problems in material supply chains. Anna Laevska, CEO of SIGMA+ and Chair of the Development Committee of the Confederation of Builders of Ukraine, explains.
“The industry is quite heavily dependent on imported materials, and logistics are not adapting quickly enough. And all of this is happening against the backdrop of active military operations. We see how rockets and ‘Shaheds’ are damaging the logistics infrastructure. All of this greatly complicates supply chains and directly contributes to increased costs and longer construction timelines,” the expert notes.
Moreover, according to her, rising construction costs can lead to delays in fulfilling financial obligations to contractors. This also affects the pace of construction work and can lead to delays in construction or even the “freezing” of certain projects.
Market driver
There are also factors that positively influence construction rates. First and foremost, these are relevant financial programs implemented by the government. The “eOselya” mortgage lending program is considered a key driver of market growth. In April of this year, the number of loans issued under this program surpassed 25,000, and their total volume exceeded 43 billion UAH. It is important to note that a significant number of these loans went to the primary market—to finance new construction. Olena Dmitrieva, First Deputy Chair of the Board of GLOBUS BANK, which participates in the mortgage lending program, spoke about this in an interview.
“It is the state program ‘eOselya’ that is currently providing the main impetus for the development of mortgages in the primary market. And when it comes to the revival of demand for new housing, this is primarily due to this mechanism. A mortgage serves as a bridge between a citizen’s ability to purchase housing and a developer’s willingness to launch new projects,” noted the bank representative.
But this bridge may face another test, as rising construction costs—albeit with some delay—will also push up the price per square meter of housing. Serhiy Pylypenko, CEO of the Kovalska Industrial and Construction Group, points this out, for example. In his opinion, given this, the “eOselya” state program will require adjustments. Here is how the expert described the situation in an interview with the Interfax-Ukraine agency:
“Currently, the program is based on an average maximum cost of 48,000 UAH per square meter (66,000 UAH in Kyiv) and has certain limits on the maximum amount. However, if construction materials continue to rise in price, the limits will have to be revised upward by at least 20–25%. Otherwise, only a very limited number of properties will qualify under the program’s terms,” noted Serhiy Pylypenko.
According to him, prices for building materials have already risen by 20–25% since the beginning of 2026, and by the end of the year, price increases could reach 30–35%.
The total cost of construction will rise accordingly. Under these circumstances, builders will face the challenge of setting appropriate prices. Here is how Anna Laevska, CEO of SIGMA+ and Chair of the Development Committee of the Confederation of Builders of Ukraine, describes it.
“A very important task for every construction company that is able to operate under current conditions is to thoroughly analyze pricing, especially when it comes to residential real estate. This is to avoid a situation where the selling price per square meter equals or is even lower than its cost price,” the expert notes.
At the same time, Anna Laevska’s expectations, given the generally difficult situation, sound quite optimistic. According to her, there is every reason to expect that construction volumes in the country may remain at the previous year’s level, and in the best-case scenario, even increase slightly.
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