- In Kiev, secondary market apartment prices were up 5.1% in March 2013 compared to last year, at an average of US$ 1,951 per sq. m.
- Primary market average prices rose by 6.7% to US$ 1,748, over the same period.
The Ukraine is still crippled by the after-effects of the great housing boom (2004 to 2008) which saw average Kiev apartment prices surge 300%. In the wake of the boom’s collapse - house prices are still 46.2% below their from September 2008 US$3,627 per sq. m peak, according to S&V Development - the currency lost massively in value, the banking system collapsed, and GDP shrunk 15% in one year.
Ukraine’s economic recovery is being held back partly by concerns about President Viktor Yanukovych, elected in 2010. His political dominance increased in 2012 with the victory of his Party of Regions in parliamentary elections. Few believe the result was free and fair. Most problematic is the imprisonment of former Prime Minister Yulia Tymoshenko. Unless she is freed, the EU is unlikely to ratify the Association Agreement.
Ukraine’s economy slowed sharply in 2012, growing only 0.2% because of the euro crisis, and tighter monetary policy. Ukraine’s GDP is predicted to grow 2.5% in 2013.
In January 2013, a real estate tax was introduced, applying to residential property owners of apartments more than 120 sq. m. and residential buildings higher than 250 sq. m.
The tax rates for 2013 are:
- UAH 11.47 (US$ 1.41) per sq. m. for apartments with “living space” on, or less than, 240 sq. m. and residential buildings with living space on or less than 500 sq. m.
- UAH 30.97 (US$ 3.80) per sq. m for apartments with living space above 240 sq. m. and residential buildings with living space above 500 sq. m.
“Living space” excludes kitchens, dining rooms, corridors, bathrooms, and storage rooms
There are no major restrictions on foreigners buying property in Ukraine. All secondary residential transactions (i.e., resales) are in US dollars, while primary sales are quoted in hryvnia, but still paid in dollars.
Analysis of Ukraine Residential Property Market »
Please note however that our yields data for Ukraine is now very old. They were last updated in January 2007, and the recent price rises mean that these figures may no longer be accurate.
Capital Gains: Capital gains are taxed at a flat rate of 1%. The sale of buildings or premises is also subject to 17% VAT.
Inheritance: Inheritance tax is imposed at a flat rate of 30% if the successor is a nonresident and the benefactor of Ukrainian property is also a nonresident.
Residents: Residents are taxed on their worldwide income at a flat rate of 15%.
Tenant Eviction: A landlord can terminate a lease without prior notice and without application to the courts, if the tenant has failed to pay rent for three consecutive months.
The recent euro zone debt crisis has hit Ukraine’s economy causing a decline in external demand and affecting the performance of export-oriented industries. Meanwhile, the local economy was dampened by tight monetary policy aimed at defending the currency peg.
Ukraine’s economy is expected to improve in 2013 with a real GDP growth of around 2.5%. Ukraine experienced unusually low 0.2% y-o-y inflation in December 2012, a continuous decline from 4.6% in 2011 and 9.1% in 2010. In 2013, inflation is expected rise to around 8% y-o-y due to the increase in tariffs for energy. Unemployment was 7.8% in 2012, a slight decline from 7.9% in 2011, according to the IMF.
The country’s budget deficit widened to around 3.8% of GDP in 2012. Including Naftogaz and Pension Fund deficits, the public sector deficit is estimated at 6% of GDP.
Ukraine is in talks with the IMF for a US$15.4 billion loan, partly to repay foreign debts that will peak at US$9 billion this year. The new agreement, if reached, could reduce the estimated fiscal deficit to around 4% of GDP in 2013. However, before it happens, Ukraine must first fulfill IMF’s condition that includes raising gas prices and allowing depreciation of its currency.
Ukraine is a deeply divided country. The Russian-speaking Eastern half leans towards Russia, while the Ukrainian speaking Western half leans toward the West.
The country’s tragedy is that the Orange Revolution of 2004, which forced a second Presidential election after protests and resulted in a clear victory for Viktor Yushchenko (with 52% votes) over Viktor Yanukovych (with 44% votes), has never bore fruit.
Yushchenko instituted no reforms, and proved an ineffective leader. He quarreled deeply with his former ally Tymoshenko, who he saw as corrupt and accused of being a covert friend of Russia.
The result of the split in the pro-Western party has been the election of a pro-Russian president, Viktor Yanukovych. Yanukovych barely won the 2010 Ukrainian Presidential Election against his fierce nemesis, Yulia Tymoshenko. Then in March 2010, Mykola Azarov, a close ally of the President, was appointed Prime Minister to replace the dismissed Tymoshenko.
Just months after the elections, Tymoshenko was arrested by the new government. And in October 2011, she was sentenced to seven years in prison after being convicted of overstepping her authority over a natural gas deal negotiated with Russia in 2009. Tymoshenko’s incarceration and alleged maltreatment in prison has sparked outrage throughout Europe. Ukraine was forced to cancel a regional political conference in Yalta, after majority of European heads of state declined to attend in protest over Tymoshenko’s imprisonment. The dispute has also led political and free trade agreements between Ukraine and the EU being shelved.
In the recent Ukrainian parliamentary election last October 2012, President Viktor Yanukovych’s Party of Regions obtained 185 seats, followed by the opposition Fatherland with 101 seats. Perceived the abuse of power, media control and incarceration of two prominent opposition leaders played a role in the results.