The second currentcy of Ukraine is the USD. But since the dollar is weak right now, some are now selling properties in hryvnias. Even though I like the idea of using Ukrainian currentcy, people say that it makes the price higher. I think prices are fair, but the peoples salaries are not. There are some interesting facts in this article along with prices.
House dream dashed
The Vakhovskys are a typical Ukrainian family. Having married four years ago, the couple — both born outside the capital — are looking to buy an apartment in Kyiv, where they studied, met and work.
But soaring housing prices, relatively low salaries and tighter lending practices by banks rattled by a shaky U.S. dollar have left the family frustrated.
Like many other Ukrainians looking to buy property after flocking to Kyiv in search of jobs, the Vakhovskys are now exploring cheaper options – such as buying a place outside the city.
"We've been looking for apartments for the last six months and, in fact, found some options, but when the dollar started tumbling the sellers decided to sell apartments in hryvnias, which made the price much higher. We had to put off buying an apartment," said Iryna Vakhovska, a 23-year-old married marketing specialist and recent graduate of Kyiv Mohyla Academy.
With about $2,000 in monthly income, below the average cutoff by banks for issuing loans, the Vakhovsky family is feeling Ukraine's real estate squeeze.
They are currently looking at a two-room apartment in Bucha, a suburb 20 kilometers from Kyiv. They are ready to accept a 20-year loan with monthly payments starting at $1,500. The payment is less than half of what monthly payments can be for purchasing a similar apartment in Kyiv.
"We know that we will have to say no to many things we enjoy now, but we are ready to sacrifice," Vakhovska said, adding that she and her husband are waiting for banks to resume mortgages to take one.
The dilemma facing the Vakhovskys is one faced by many families. It is rooted in strong demand for flats, foremost in Kyiv. In turn, real estate prices have surged to astronomical levels, but buyers still brave enough to pay top dollar for average property now face tighter lending practices by banks.
Serhiy Kostetskyi, a property expert at Kyiv's SV Development, said prices for Soviet apartments that were selling in the $10,000$20,000 range in the early 1990s have surged since, increasing sixfold in the past six years alone.
Not all Ukrainians are ready to assume the burden of mortgage payments because of a dramatic gap between average salaries and housing costs.
"This is real serfdom," said Iryna Yaroshenko, a married university graduate. "The prices are very high, and I know very few couples who risk taking a mortgage. Most rent apartments," Yaroshenko said, noting she and her husband live in her aunt's apartment, which relieves some of the financial burden the family faces.
"A family needs at least $3,000 of income to be able to pay a mortgage and make ends meet," says Yaroshenko, who once worked as a consultant in one of Kyiv's real estate agencies.
As of May this year, state figures suggested the average monthly salary in Ukraine was some $300, and slightly higher in Kyiv, $550. Yet experts said official figures do not provide a full picture, suggesting salaries are higher but households conceal much of their income to evade taxes.
Nevertheless, compared to real salaries, the cost of a square meter in Kyiv is shockingly high. An average of $3,200 per square meter in Kyiv was the listing cost in June, Planeta Obolon real estate agency reported. At such prices, dilapidated two to three room Sovietbuilt flats start at $200,000. Flats considered average in Western countries, but located in downtown Kyiv, cost from $500,000 to millions of U.S. dollars.
Experts said sales have been sluggish in the past year, partly due to high prices and the mortgage crisis. But caution that prices are not expected to drop as demand is strong across the country, foremost in Kyiv where jobs are most plentiful.
"Today the housing real estate market is practically paralyzed," said Kostetskyi, adding that prices are unlikely to drop, because sellers will keep their sale and rent prices high until the end.
Ordinary Ukrainians, meanwhile, remain hopeful that prices will drop. Some are even attempting to burst Ukraine's wouldbe real estate bubble.
Denis Oleinikov, a 30 yearold owner of the Internetshop Futbolka.ua, launched a separate web blog, which aims to raise awareness of the coming real estate crisis called "Yes to Crisis."
"The price per square meter here does not conform to world tendencies nor to a fair price, which would be set if there were transparent procedures of land use, planning, equal accessibility for developers and if there weren't hidden cartel agreements among the largest developers," Oleinikov said in defense of his cause.
"Do we live in such a successful country that we can afford paying four times more than people pay for housing in Tokyo when taking into account an average salary?"
"Is it fair to give 2030 years of your life for a miserable corner of lowquality housing?"
Dariya Orlova can be reached at Orlova@kpmedia.ua or 496¬4563,ext. 1105.
Do you think housing is affordable in Ukraine?
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