Property prices in Kiev, the capital of the Ukraine rose
unexpectedly during the year ending April 2012, but experts are
doubtful as to whether this increase is sustainable, especially as
the economy is slowing down. During the last year the average price
of an apartment in Kiev increased by 28.9%, but is still 30% less
than the peak of the housing boom in 2008.
In November last year property prices rose by 25.7% year-on-year
which was something of a surprise as they had declined for nearly 3
years. However prices declined during the following months. The
housing boom in the Ukraine took place between 2005 and 2008, and was
mainly due to strong economic growth and interest from foreign
buyers.
The boom was encouraged by the President, and as a result property
prices increased by more than 1000% between the second quarter of
2000 and the second quarter of 2008. Between 2000 and 2007, GDP grew
by an average of 8% annually.
Most of the properties bought by foreign buyers were purchased by
Canadians, Kiwis, British, Emiratis and Cypriots, as well as some
Americans. Properties were also brought by wealthy Ukrainians, and
the average price rose to well above anything that could be afforded
by the average resident. In late 2008 this foreign demand dropped off
sharply due to the global crisis.
Domestic demand also decreased as Ukraine's main export is steel,
and the need for this commodity collapsed. As a result GDP contracted
by 15% in 2009. Since then the economy has expanded by 4.1% in 2010,
and 5.2% last year. The Ukraine is quite an attractive proposition,
as the economy is in relatively good shape, and the cost of buying a
property is low. Ukraine also has the advantage of having good rental
yields, and the laws are in favour of landlords.
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