The Lower Depths?

Author: Sergei KomissarovPhoto: InterMedia consulting

The most intensive house in Ukraine was fixed in distant 1987. Then in our "soviet" country 21 million square meters were put into operation. It was a record, which will be almost impossible to repeat for the Ukrainian builders.

Everybody who applied for these square meters got them. They were enormously happy with their new flats and hey are still today. But later things weren't so easy as "Single and indivisible" died.

The avalanche of problems was brought down on the citizens of the USSR. Including problem of housing.

There have been no aided persons since. Victims of Chernobyl, "afghans", representatives of large families were frozen forever in a multikilometre turn.

In 1996 the passionless Goskomstat (State Department of Statistics) fixed: in Kiev it was put into an operation up to 416 thousands square meters of housing. People invested all their economies in these cherished squares. And people did correctly. In fact price of housing - and especially in the capital - began to rise in geometrical progression.

Today there are hundreds of thousands such people in the capital. Majority from them lives in the mode of "Contra spem spero" - they hope without a hope. Annually the population of Kiev is increased by 100-200 thousand of residents of the provinces that come here to look for financial prosperity. All of them dream about their house or flat in the capital instead of rural despair.

Sitting with a wife and godfathers of his child in the kitchen with the bottle of a sort of samogon, might-have-been residents of Kyiv understand: to purchase housing is an absolutely impossible thing for them. Add here rise of the interest rates of credits for housing by banks. They understand: most interested in purchasing an apartment at Troeschina or Poznyaky simply are not able to return credit. Never.

Every year the housing construction in Kiev increases. In 2007 it was built in Kiev 1 million 400 thousands of square meters of housing. But here is paradox: nobody of those who is ready though today to register on these squares, are able to realize this dream in practice. And it is in spite of cheerful reports of Kievan city administration on growing welfare of habitants of city of Kiev.

Homeless citizens (including officers, victims of Chernobyl, "afghans", representatives of large families) disbelieve in this administrative heresy. Because they know what does it mean to live in a Kiev without any shelter.

Mykhaylo Holytsya, chief of the Head Department of Housing in Kiev:

- Answering the question, when the building market will attain bottom, I will answer without any doubt:  n-e-v-e-r!

Negative tendencies at the market of housing in the capital exist indeed. And to pretend, that they don't exist is senselessly.

There are several criteria, having negative influence upon market of the capital real estate.

First it is a difference between the rate of dollar and hryvnya. All of operations at the market of housing are conducted in hryvnya. And considerable part of population keeps their savings in dollars. But in practice $100 is only Uah460. That is why, when a resident of Kyiv wants to buy an apartment for 100 thousands of USD, will be asked: "So you have only UAH460 thousands. And where is the rest?" And what will the buyer do? He waits, when he has 550 thousands again.

Second reason. Today banks practically halted crediting of physical persons.

Third - and quite simple. It is a summer. As a rule, exactly in summer people do not buy new housing. They rest; arrange children for study to the institutes. And from September the activity at the market of housing increases.

In addition, there are other reasons influencing on a market situation. It is a prime price of building materials, wages, cost of energy et cetera. In Ukraine they do not go down, and vice versa - increase.  

Julia Vasilenko, analyst of capital market of real estate:

- Concerning the market of the capital real estate I would not use word "crash", as there is no ground for it. Actually there are negative tendencies hat cannot be denied by analysts of market. They are connected with the situation that is observed at the market of the real estate of the USA and Europe. The Ukrainian market cannot remain untouched.

But the main reason, negatively influencing on the sale of apartments, is that banks simply stopped any kind of crediting - both to builders and buyers. Therefore companies without circulating assets are today put before the fact of survival. If a situation with credits does not change to the best, certain part of them simply will bankrupt.

So, there is certain sort of crisis in it. And it is possible to tell here that monopolization of building market is possible in Kiev. Consequently, it will affect prices on housing.

But all the same high demand on square meters in the capital will not make the market fully fell down. Population of the capital grows constantly. Annually ten, if not hundreds of thousands of new habitants move here from province. Demand on housing in Kiev will not be satisfied at least for seven years. And exactly this demand will dictate those terms that are today inherent to the market of the real estate.

Gradual monopolization of capital market of the real estate also can negatively affect price at the market. It will be impossible to decline them, probably.

Another factor of permanent growth of price of capital flats is a deficit of build areas. Add to it the level of corruption of the capital administration, and you will understand why prices of housing in Kiev will remain higher then the European yet for a very long time.

Oleksiy Kotenko, acting director of one of large building groupings:

- Problem of price rise of the capital real estate is an object for speculations. Statements of government and Kiev City Administration about building of social housing, about price-cutting on flats twice are all of profanation. They try to collect political balls and to postpone demand for housing.

However the market of the capital real estate lives on its special laws. Both in 2007 as well as in 2008 there are certain reasons for price rise and decline.

Today only few of residents of the western states can buy real estate in the capital. But price of housing in Kiev is out of any limits. The reason is in the lack of choice of investment for our citizens.

And the actions of government show it us very expressly. It is risky and unprofitable to keep the economies in foreign exchange or gold, or in trusts.

Therefore the real estate is for many our compatriots that unique and reliable method of saving that can give a small (within the limits of 5-6 % annual) income. For this reason our compatriots invest their free economies in housing, increasing its enormous price.