Ukraine
Last Updated:
May 24, 2010
Ukraine’s property market has been in crisis since 2008. GDP collapsed in 2009, falling 14%, and the country has suffered a fiscal crisis, somewhat relieved by a massive IMF bailout. Transactions have plunged, construction is almost at a standstill.
By March 2010 Kiev house prices had dropped 40.5% from their August 2008 peak, to UAH 2,516 (US$ 317.3) per sq. m. (from peak prices of UAH 4,227 (US$ 533) per sq. m. In the first quarter of 2010 house prices were still falling, though the rate of decline has been decelerating.
Ukraine’s housing boom (2005 to 2008) was fueled partly by foreign buyers, but also by strong economic growth (7% GDP growth per annum 200-2007) and interest rate differentials. The boom was encouraged by pro-west President Victor Yushchenko’s ‘Orange Revolution’ electoral victory.
A significant number of buyers were British, with some Americans, Emiratis, Cypriots, Kiwis and Canadians. Ukraine’s wealthy elite also joined in the buying frenzy, pushing prices way beyond the means of the average Ukrainian.
Then in late 2008 foreign demand plunged, as US and UK homebuyers struggled with the global crisis. Then domestic Ukrainian demand plummeted, due to a collapse in demand for Ukraine’s main product, steel. Ukrainians’ average income fell 12.9% during the year to IH 2009, according to the State Statistics Committee of Ukraine.
Because of the massive size of the property bubble (there was a nominal price increase of 562% from 2002 to 2007) it will take a while for the housing market to correct itself.
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.
By March 2010 Kiev house prices had dropped 40.5% from their August 2008 peak, to UAH 2,516 (US$ 317.3) per sq. m. (from peak prices of UAH 4,227 (US$ 533) per sq. m. In the first quarter of 2010 house prices were still falling, though the rate of decline has been decelerating.
Ukraine’s housing boom (2005 to 2008) was fueled partly by foreign buyers, but also by strong economic growth (7% GDP growth per annum 200-2007) and interest rate differentials. The boom was encouraged by pro-west President Victor Yushchenko’s ‘Orange Revolution’ electoral victory.
A significant number of buyers were British, with some Americans, Emiratis, Cypriots, Kiwis and Canadians. Ukraine’s wealthy elite also joined in the buying frenzy, pushing prices way beyond the means of the average Ukrainian.
Then in late 2008 foreign demand plunged, as US and UK homebuyers struggled with the global crisis. Then domestic Ukrainian demand plummeted, due to a collapse in demand for Ukraine’s main product, steel. Ukrainians’ average income fell 12.9% during the year to IH 2009, according to the State Statistics Committee of Ukraine.
Because of the massive size of the property bubble (there was a nominal price increase of 562% from 2002 to 2007) it will take a while for the housing market to correct itself.
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 »
RENTAL YIELDS
Last Updated: Jan 08, 2007
Yields in Kiev range from 7.50% - 10.2%, by Global Property Guide estimates. The average price per square metre (sq. m) of apartments is around €2,930.
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.
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.
TAXES AND COSTS
Last Updated: Jun 21, 2010
Effective Tax Rate on Rental Income |
|||
| Monthly Income | €1,500 | €6,000 | €12,000 |
| Tax Rate | 15% | 15% | 15% |
| Click here to see a worked example | |||
Source: |
Disclaimer | ||
Rental Income: Gross rental income of non-resident foreigners is taxed at a flat rate of 15%. Leasing a property is also subject to 20% VAT.
Capital Gains: Capital gains are taxed at a flat rate of 1%.
Inheritance: Inheritance tax is imposed at a flat rate of 30% if the successor is a non-resident and the benefactor of Ukrainian property is also a non-resident.
Residents: Residents are taxed on their worldwide income at a flat rate of 15%.
Capital Gains: Capital gains are taxed at a flat rate of 1%.
Inheritance: Inheritance tax is imposed at a flat rate of 30% if the successor is a non-resident and the benefactor of Ukrainian property is also a non-resident.
Residents: Residents are taxed on their worldwide income at a flat rate of 15%.
BUYING GUIDE
Last Updated: Mar 23, 2007
Roundtrip transaction costs, i.e., the total cost of buying and selling a property, are around 5% to 7% of the property value. The agent's commission is around 3% to 5% of the property value. Other costs include pension fund levy (1%), stamp duty and registration fees.
LANDLORD AND TENANT
Last Updated: Oct 09, 2006
Rent: Rent and rent increases can be freely negotiated. The parties may agree on the procedures for periodic rent increases (i.e. depending on inflation). This must be stipulated in the lease contract.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.
ECONOMIC GROWTH
Last Updated: May 24, 2010
Ukraine’s economy expected to improve
A former Soviet republic, Ukraine has a population of around 46 million and GDP per capita of US$4,300 in 2008, one of the lowest in Europe.
In 2009, Ukraine’s economy plunged by 15%, the deepest decline since 1994. The main reason was a dramatic drop in steel prices and exports. Steel accounts for more than 50% of exports.
Ukraine’s economy expanded rapidly in the past eight years, average annual GDP growth of 7.3% from 2000 to 2008. In 2010, the Ukrainian economy is expected to grow moderately, with a projected real GDP growth of 2.5% to 3%.
Inflation slowed to 12.3% in 2009 from as high as 22.3% in 2008. In March 2010, annual inflation stabilized at 11%. It is forecast that inflation will be below 10% in 2010.
Unemployment stood at 8.8% in 2009, up from just about 3% by the end of 2008. In 2010, the unemployment rate is expected to decline moderately to 8%, as the economy slowly recovers.
In February 2010, Viktor Yanukovych, a pro-Russian bureaucrat, 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.
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 Yanukovych (with 44% votes), has never born fruit.
Yushchenko instituted no reforms, and proved an ineffective leader. He quarreled deeply with his former ally Tymoshenko, who he sees as corrupt and accuses of being a covert friend of Russia.
In 2006 a parliamentary crisis erupted as a result of inconclusive parliamentary elections, and in August 3, 2006, Yanukovych returned as prime minister. Then in 2008, another political crisis erupted when PM Tymoshenko’s BYuT and the opposition Party of Regions to limit the power of the President. Yushchenko’s party, Our Ukraine, withdrew from the governing coalition. In October 8, 2008, parliament was dissolved - the 3rd parliamentary elections in just 3 years.
The result of the split in the pro-Western party has been the election of a pro-Russian president.
There has already been a dramatic rapprochement with Russia, strong moves to curtail freedom of the press, and moves to prosecute Tymoshenko for corruption. Discussion of the terrible famine under Stalin’s collectivization (the Holodomor), in which 7 million Ukrainians died, and the killing by the Soviets of 4/5th of Ukraine’ intellectual elite and ¾ of the Red Army’s high-ranking officers, are no longer welcome. The press is being shackled, reform is on the back burner. Welcome to the dark ages.
In 2009, Ukraine’s economy plunged by 15%, the deepest decline since 1994. The main reason was a dramatic drop in steel prices and exports. Steel accounts for more than 50% of exports.
Ukraine’s economy expanded rapidly in the past eight years, average annual GDP growth of 7.3% from 2000 to 2008. In 2010, the Ukrainian economy is expected to grow moderately, with a projected real GDP growth of 2.5% to 3%.
Inflation slowed to 12.3% in 2009 from as high as 22.3% in 2008. In March 2010, annual inflation stabilized at 11%. It is forecast that inflation will be below 10% in 2010.
Unemployment stood at 8.8% in 2009, up from just about 3% by the end of 2008. In 2010, the unemployment rate is expected to decline moderately to 8%, as the economy slowly recovers.In February 2010, Viktor Yanukovych, a pro-Russian bureaucrat, 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.
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 Yanukovych (with 44% votes), has never born fruit.
Yushchenko instituted no reforms, and proved an ineffective leader. He quarreled deeply with his former ally Tymoshenko, who he sees as corrupt and accuses of being a covert friend of Russia.
In 2006 a parliamentary crisis erupted as a result of inconclusive parliamentary elections, and in August 3, 2006, Yanukovych returned as prime minister. Then in 2008, another political crisis erupted when PM Tymoshenko’s BYuT and the opposition Party of Regions to limit the power of the President. Yushchenko’s party, Our Ukraine, withdrew from the governing coalition. In October 8, 2008, parliament was dissolved - the 3rd parliamentary elections in just 3 years.
The result of the split in the pro-Western party has been the election of a pro-Russian president.
There has already been a dramatic rapprochement with Russia, strong moves to curtail freedom of the press, and moves to prosecute Tymoshenko for corruption. Discussion of the terrible famine under Stalin’s collectivization (the Holodomor), in which 7 million Ukrainians died, and the killing by the Soviets of 4/5th of Ukraine’ intellectual elite and ¾ of the Red Army’s high-ranking officers, are no longer welcome. The press is being shackled, reform is on the back burner. Welcome to the dark ages.
