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What is happening to residential development in Ukraine

Author : Oleksandr Okhrymenko

Source : 112 Ukraine

Lately, talks about buying and building new housing are becoming more frequent and popular
10:04, 24 November 2017

Read the original text at 112.ua.

forum.domik.ua

Remember the famous phrase from Bulgakov's novel "The Master and Margarita": "... the housing issue only spoiled them"? In fact, the topic of housing remains acute for Ukraine. Many Ukrainians either do not have housing, or live in a predicament.

Do you want to hear good news? I have them. During the first 9 months of 2017, 6.89 million square meters of housing were commissioned. For comparison: in 9 months of 2013, 5.7 million square meters were introduced, and for 9 months of 2016 - 5.6 million square meters. That is really a success. But no one talks about it. Although this is definitely positive news. The more housing, the better situation we have. People cannot live well in slums.

Related: Ukraine, IMF continue discussion of 2018 draft budget to maintain its deficit at 2.5% of GDP

Ukrainian government likes to boast that this year the real GDP of Ukraine is growing and growing. And no one remembers that this growth in many respects the merit of construction, and, first of all, the construction of housing. For 9 months of 2017, the construction index in Ukraine increased by 23.7%, where the housing construction index rose by 13%. This is the driver of the Ukrainian economy. Why? Think about it.

Construction creates demand in the domestic market for products made of metal, bricks, and other building materials. And this means that Ukrainian metallurgists will show growth in production and GDP growth. The same applies to construction materials, 80% of which are produced in Ukraine. Each hryvnia, invested in the construction of Ukraine, provides GDP growth of four hryvnia.

Related: EBRD predicts growth of Ukrainian GDP up to 3% in 2018

At the moment, the main investors in housing construction are the Ukrainians themselves. They often use their stash in currency, change to hryvnia, and buy housing. It is good, but it is not enough. For normal demand and solving housing problems you need mortgage lending. Some builders offer to pay for housing on an installment plan. But this is not a mortgage. Builders can agree that the buyer will pay for the purchased housing for two to five years. It is awfully small. Ukrainians need normal mortgage lending for a period of 20-25 years, but at rates not 20-25%, as proposed by Ukrainian banks, and not more than 12%, and preferably 5-7% in UAH per year. This is really worthy mortgage lending. It is the launch of mortgage lending that our market and our economy need.

Related: GDP growth of less than 2% is degradation of Ukraine's economy

The methods of strengthening the country's economic growth have long been known in the world. And these methods do not contain empty slogans and stories about mythical investors. Everything is much more prosaic and more real. But this is exactly what they do not want to do in Ukraine. Now neither the Groysman’s government nor the NBU are even discussing the topic of launching mortgage lending. Everyone hopes that Ukrainians will continue to use their savings for the growth of construction, and thereby stimulate the growth of Ukraine's GDP. When, finally, what will really be done for the Ukrainian economy, and what can be called a real reform?

Related: Fitch forecasts increase in Ukraine’s GDP

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Система Orphus

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