What can make housing cheaper?
Ukrainian Prime Minister Mykola Azarov demanded that the capital’s officials provide cheap housing. Four thousand hryvnias for social housing and up to eight thousand hryvnias on average throughout the city — this is the price per square meter that Kyiv’s developers must fit into, based on Azarov’s new norms. The new prices in the capital, according to prime minister, should be the lowest in the country and become benchmarks for other regions.
Will the “building barometer” in the capital go down to the value set by prime minister?
According to experts surveyed by The Day, at best prices will not go up this year. “I don’t see any special preconditions for the price increase,” supposes Iryna Lukhanina, director general of the real estate agency Blahovist.
In the opinion of Oleksii Zerkalov, direct investment department manager at the investment company Dragon Capital, real estate market trends will be guided by the pace of the resuming of mortgage lending. “Two factors are decisive for the final resumption of mortgages: a low lending rate, in the amount of 12-13 percent, and a long-term capital. While the inflation prognosis for this year gives reasons for optimism regarding low mortgage rates, ‘long’ money is problematic. There are still no resources for 5-10 years. Therefore the pace of growth of the housing market will be slow. No abrupt price increase or price reduction for a square meter is expected in the nearest year or two,” he says.
Deputy Prime Minister and Mi-nister for Social Policy Serhii Tihipko, in turn, expects that thanks to mortgage lending housing can become cheaper already next year. “If we manage to stimulate mortgage [lending] now to renew the demand we had at least in 2007 — in this case, I suppose, we’ll see price reductions for housing at once,” he said recently at a press conference in Kyiv. The minister assured that by the end of this year the government will do all that is necessary to create good conditions for construction companies, leading to increased supply on the housing market. “Today there is another problem for us, which is not for the developers to deal with, namely that of demand,” stressed vice prime minister.
Conversely, executive director of the Crediting Brokerage Agency, a member of the board of the Ukrainian Mortgage Association Oleksii Pylypets predicts price increases for housing if the government’s economic development plans come true. According to him, in Kyiv the average price per square meter in an unfinished building is 1,750 dollars, and in a finalized one — 2,100 dollars.
Meanwhile, the authors of the law “On Regulating City Planning Activity (Regarding the Reduction of Licensing Procedures for Developers) No. 7418, dated December 2, 2010,” which was already supported by the parliament but not yet signed by the president, promise a second breath for the housing market.
Tihipko, under whose supervision the document was elaborated, describes it as revolutionary. “The number of licensing procedures for building is reduced from 93 to 23 (the investor only deals with nine), and the term of getting all required decisions for the beginning of construction work will be reduced from a year and a half to two-three months,” he said when the law was adopted.
This will allow construction-related corruption to be reduced by 90 percent, and will increase the inflow of investments in the field many times over, opines the head of the board of directors of the Ukrainian Building Association Lev Partskhaladze.
“The buildings that will be built as soon as this spring will be cheaper for both buyers and developers. Depending on the attractiveness of a settlement, the price reduction can constitute about 20 percent,” said Yurii Serbin, deputy head of the committee of the Verkhovna Rada for city planning and housing, agrees with Tihipko.
Meanwhile, experts are less optimistic in their prognoses. For example, in the opinion of Anna Sisetska, a lawyer at the JSC Law Firm Vasyl Kisil and Partners, the law contains many legislative omissions, inconsistencies, and terminological collisions which, if signed by the head of the state, may have very negative consequences for the construction sector in general. “It is impossible to implement the main part of its provisions, which are meant to solicit positive public reactions,” the lawyer told The Day. As of today, Sisetska explains, there are no possibilities for the practical realization of the declared principles of “silent agreement,” “single window,” “declarative principle of beginning of actions,” “registering the licensing documentation for the object,” etc.
At present, experts point out that according to the law on planning and developing, the community can discuss and make its suggestions regarding master plans for settlements, detailed plans of territories, projects of land development, and city planning and grounding. The law actually deprives the public of the right to make suggestions on the le-vel of preparation of management decisions regarding the development of certain territories. That is ecological rights of citizens are violated and the way to building ecologically dangerous buildings is open.
Nevertheless, developers refute all these accusations. Public hearings, says Partskhaladze in a conversation with The Day, remain in the development of the master zoning plan, in the course of which the number of floors in a specific place, the admissible level of pollution, etc. will be determined. In that case different hearings will be held. However, the agenda of these hearings has not been determined yet. Only construction objects of the third-fourth categories will be subject to obligatory ecological examination (bridges, stadiums, atomic power plants, etc.), Partskhaladze adds. Developers and clients will control the observation of the ecological norms, since during the construction a commission examining the observation of building norms will visit them. And in case of violations they will be financially accountable.
However, even the authors of the law admit there are some drawbacks to it. Answering journalists’ question about whether any responsibility is presupposed for officials for providing documents to developers late, the head of the board of directors of the Ukrainian Building Association said that all fines were removed. “We decided to move this for the consideration of the resolution (of the Cabinet of Ministers. – Author). We wanted to remove figures from the law where possible, since they can be changed in time,” Partskhaladze explained the removal of the important item from the document. According to him, the chapter on allotting land, which should be finished in three months, was also omitted. “We still didn’t make free rent for plots for multifamily housing possible,” he added at the end.
