Pylypets: Housing problem is one of the most serious in Ukraine

Author: Sergei KomissarovPhoto: InterMedia consulting

Way out from his situation exists. You may borrow money and you will try to borrow them at appropriate interest. Our compatriots without apartments will take an advice of their relatives and go to a respectful (as they think) bank to look for a real estate loan.

And this is just the beginning of something interesting and essential. Oleksandr Pylypets, the Head of the National Real Estate Association of Ukraine, told the IMC (InterMedia Consulting) about the situation ot our real estate market and about the factors preventing from its development. 

- Is the housing problem really serious in Ukraine?

-          More than 1.300 million families are waiting for their turn for housing. They will wait for many decades.

An average Ukrainian has statistically 22-23 square meters of housing. Though according to the UN standards this index must be at least 30 square meters per member of the family.

You see, we have to follow the Europeans.

Some other findings. About 41% of the Ukrainians live today in hostels, small apartments of hotel type, in underground apartments and in multifamily units. They have less than 13 square meters per person.

Another detail: about 70% of the housing in Ukraine must be repaired immediately.

I would like to stress that housing construction in Ukraine increases. But it makes only 40% of housing construction of 1987.

- What are the main factors of development of the market of real estate loan?

-          In the first quarter of the year it developed at high level.

Debts of the real estate loan made UAH 35.2 billion; it is a good index. Real estate loans grew in 19 times from 2005. Increase of the first quarter of the year made 13%. GDP makes 9% in Ukraine, it is the highest result for the CIS countries.

The most part of loans had been made in dollars and euros.

This tendency decreased during the last 9 months, but due to problems with sources of investments in the real estate the analysts predict growth of payments in foreign exchange.  

The housing problem in Ukraine remains very difficult. The most part of the credits is asked just for buying housing. Key players here are big system banks with big foreign capitals.

 About 90 banks presented their real estate programs. In April and May there were a tendency for growth of interests (about 25%). The whole range of new players will join the real estate loans; we are waiting for foreign banks. They will conduct an aggressive loan campaign in Ukraine.

- In what regions of Ukraine do our compatriots ask for real estate loans?

- Kyiv and Kyiv Oblast, Odessa, Dniepropetrovsk, Donetsk, Kharkv have always been leaders, analyzing the real estate loans we have found some tendencies.

First, the National Bank of Ukraine hardened its requirements. I mean a whole range of initiatives aimed to minimize possible risk.

Second, we are watching how interests are growing. In hryvnya hey make 20-25%, in foreign exchange - 14 - 18%.

Third, the terms have been changed. One must pay a loan during 6-8 years. Average sum of loan makes UAH 150 thousand

- What main factors prevent for successful  development of real estate market in our country?

- First of all, it is unstable economic situation in our country: high rate of inflation, growing risks of loan.

Local banks have serious problems with loans, especially in UAH. The lack of stable and long-term resources is evident. Loan bonds could play role of such resources.

We have to carry out the appropriate legislative base.

 Last year we initiated introduction of amendments to the law "On real estate bonds". The bill had been introduced to the VRU. But the VRU had been dismissed.

This year we introduced the bill once more. If last year we had no remarks, this time we have received the bill back with a package of notes and remarks that stay aside from our concept. As for the moment we have to explain to the Ministry of Finance the necessity of these amendments. 

Other key factors are: low level of the development of investors, low level of the legislative base, low level of real estate standard portfolio.

The main factor is lack of single state policy of housing loans in Ukraine. We have got a concept of our Prime Minister, we have got a concept of the Secretariat of the President, but have no single program of the system.

- Anyway, life is going forward. Housing constructions is in progress, people are taking loans, buying apartments...

-          Real estate market is the key segment of real estate loan system. Dynamics of housing proves it.

But it is not satisfactory. Request for housing is too high, it is several times higher than supply. Another tendency: during the last 6 months real estate market had been in the state of stagnation. Price rise due to the inflation.

In Kyiv average price of one square meter has become higher than $3000. it is connected with land allocation, with preparing of appropriate papers.

- What are the prognosis for this year?

-          Real estate loans must increase by 40%. In Germany this index makes 5%.

Foreign banks and companies will keep great interest to the Ukrainian housing market. As for me, it is a very positive factor.

Those who want to buy housing will wait for increase of interest. The main reason is problem with financial sources. Let us hope that competition of banks will base on development of new segments, of new types of business.