Buying a home still difficult for millions.
Oleksandra Ustinova, 25, has been dreaming of buying her own place since she moved to Kyiv from her native Vinnytsia eight years ago. She earned her master’s degree in political studies from Kyiv Mohyla Academy and now works at a public relations company.
Oleksandra Ustinova
“I have to earn at least Hr 18,000-20,000 a month to collect a down payment.”
– Oleksandra Ustinova, a Ukrainian.
“The job pays well by Ukrainian standards – Hr 5,000-6,000 ($750) a month,” Ustinova said.
“But I’ve done some calculations and figured that I have to earn at least Hr 18,000-20,000 a month to collect a down payment.” Moving back to Vinnytsia for cheaper real estate is not an option either, as her salary there would drop to Hr 1,500-2,000 a month.
Young Ukrainians have limited opportunities to become home owners. Many are renters, sharing cramped apartments or living with relatives – sometimes three generations per apartment.
The tough situation is driving many young Ukrainians abroad in search of better, cheaper housing. Experts say poor housing options are why almost one-quarter of Ukraine’s students are willing to leave their country in search of better lives abroad, according to an opinion poll conducted by the Ministry for Family, Youth and Sports in 2008.
So, in order to build a better nation, building more affordable housing would be a good place to start. But it doesn’t appear likely anytime soon.
Research published July 8 by Gordon Rock, an international real estate agency, revealed that an average Kyiv resident would need to save their entire monthly salary for 20 years to have enough to buy a condo. In Berlin it would take only three years, in Helsinki – seven, and in Oslo – 10.
The problem in Kyiv is the enormous gap between incomes and real estate prices. Even a small studio apartment can cost between $50,000 to $100,000 in Kyiv, depending on location.
And that’s only the start. Whereas loans in many Western countries are at an interest rate of around 4-5 percent, in Ukraine it’s around 20-25 percent.
“A Ukrainian ends up paying the price of 20 condos,” Ustinova complained.
But on the flip side, Ukrainians have advantages over Westerners in that they pay far less taxes. Property owners in Ukraine also pay no property taxes, in contrast to most Westerners, a circumstance that drives up prices in Ukraine.
Nevertheless, young Ukrainians feel they have less options due to inflated real estate prices and double-digit interest rates.
“I like the idea of government reducing the price of properties by giving construction companies free land lots.”
– Oleksandr Solontay, a regional development and self-governance expert.
A government program in existence since Soviet times is aimed at purchasing flats for the country’s poorest, but there is nowhere near enough money to go around. More than 1.2 million young families and single people have applied for the program.
It usually takes from 20 to 30 years to get an apartment or a refund on the purchase of a property from the government. Most young people simply do not want to wait for the state to dole out apartments. “I don’t expect to get anything for free,” Ustinova said. “I just want the government to provide us with affordable housing and low-interest mortgages.”
The government in June allocated more than Hr 1 billion to provide affordable housing for citizens. The lion’s share – Hr 900 million – will be spent on supporting the construction of new low-cost houses, with the remaining Hr 140 million to help certain categories of citizens, such as military personnel and young families, purchase already built apartments. Prime Minister Mykola Azarov authorized state Oshchadbank to fund construction of homes and said 15 million square meters would be built annually.
“I like the idea of government reducing the price of properties by giving construction companies free land lots,” said Oleksandr Solontay, a regional development and self-governance expert. “The cost of the land plot makes up to 20 percent of the apartment price, and 50 percent of it goes to bribes. So now, hopefully, those flats will be at least 20 percent cheaper.”
Solontay and a number of activists from non-governmental organizations marched on Khreshchatyk Street in central Kyiv wearing pajamas and carrying kitchen utensils, walking up to the cabinet of ministers and parliament buildings to demand that authorities keep their promises and provide youth with affordable places to live. “Of course I don’t think that the government will build those low-price houses within the next few months,” Solontay said. “But what they can do now is to offer more low-interest mortgage loans to young people.”
A lot of young people, however, say that “privileged” loans are made to “privileged” people. Often potential borrowers need to pay bribes to qualify for loans. That means more hardship is ahead.
The current situation drives many Ukrainians to hold down two or more jobs in order to save for a down payment to buy property in Ukraine. Others just give up hope. ne Ukrainian, who did not want to be identified, decided to stay in Sweden after graduating from Gothenburg University. She got a job at the faculty of her alma mater and, a few months ago, became the happy owner of a two-bedroom condo. She got a mortgage with a 2 percent interest rate.
“Here in Sweden people have a choice – either to rent an apartment or buy their own condo,” this person said. “It’s not about money, it’s about choice.”
Irena Karpa
In Ukraine, that choice exists only for a few. Irena Karpa, a writer and a singer, said she isn’t interested in buying in Kyiv. “I am completely against buying property here in Kyiv because the quality of housing here is too poor for the price they ask,” she said. “It’s a rip off.”
Kyiv Post staff writer Olesia Oleshko can be reached at oleshko@kyivpost.com.
