International research by Global House price Index indicated that in 2016 Ukraine was on the second place in the world by the drop of prices for homes (Brazil was #1). During 2017 home prices in Ukraine dropped further 2%, Finance.ua reports.
Experts believe home prices are unlikely to match the rate of economic growth, which is at about 1-2%.
One problem of the drop in prices for real estate in Ukraine is its high interest rates. Right now the interest rate to borrow money for a new home is over 20%.
This makes borrowing money to buy a place to live unfeasible. Ukrainian experts believe the interest rate should be at about 13-15% to make sense for locals to take a home loan from a bank.
At the same time, home loans are given for only up to 15 years.
For a person with the average salary (in June an average wage in Ukraine was around 7,000 hryvnia or USD $270), it would take 65 years to buy a 1-room apartment, if they were to save 10% of earnings.
Cities with the cheapest prices for apartments in Eastern European cities
The scheme below shows how long it would take a person on an average salary to collect money for a cheap home, if they were to save 10% of their earnings and buy the property for cash.
- Moscow: USD $100,000 (75 years)
- Kiev: $25,000 (65 years)
- Bucharest: $40,000 (47 years)
- Warsaw: $50,000 (34 years)
- Minsk: $30,000 (34 years)
Source: Segodnya.ua.
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It’s so sad that people have no opportunity to buy their own apartments. Living with parents is one of the most common reasons for quarrels in young couples. Each woman wants to keep the house in her own way. The government should force the banks to make interest rates lower, so young married couple could afford a mortgage. Right now rates in my country are too high.
I would hate to go in and buy up a place, like a “rich foreigner” I watched the rich people from California come into little towns and New Orleans after Katrina, just like carpetbagfers after the Civil War, and buy up everything. No wonder people would hate you.
Robert,
No one hates foreigners buying apartments in Kiev or Moscow. There are lots of expats, especially in Moscow, as it offers low 13% personal tax on income, and at the same time world class facilities. A few prominent celebrities even became Russian citizens (Steven Seagul, for instance). They love westerners in Ukraine and Russia 🙂
Wow, i thought that Moscow had one of the most expensive real estate prices throughout Europe. This is news for me. I live in the city and it’s getting bigger and bigger every year. It is starting to really make me nervous. I mean, the traffic is so heavy, you literally get +1-2 hrs. of driving in jams in order to get out of town for weekends. The subway is growing and getting more crowded with every newly added station. I wish we could change policies, so that other Russian cities were tempting to live in.