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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Mortgage beyond means

Bankers: “In order to arrange for a USD 60,000 mortgage at 15 percent per annum, the borrower must make upward of 14,000 hryvnias a month”
18 October, 2011 - 00:00
Photo by Kostiantyn HRYSHYN, The Day

On October 15 a march of youth who have no housing of their own was held at the heart of the Ukrainian capital city on Saturday. Young people with household implements (spoons, pots, mugs, plates) and posters went along Khreshchatyk from the Kyiv City Administration towards the European Square, on their way they made a stop at the Cabinet of Ministers and finished their march in Mariinsky Park near the building of the Parliament. People carrying two beds led the march as a symbol of that in Ukraine young people can earn money perhaps only for a bed but are unable to place it in an apartment of their own. The activists made stops at Kyiv City State Administration, the Cabinet of Ministers, and the Parliament and blew balloons as a symbol of unfulfilled promises, and gave MPs and state officials bricks with bows, as if saying that this time the bricks were used peacefully.

By doing this the participants of the event tried to once again draw attention of the authorities and society to one of the most urgent issues—the deficit and high cost of housing. In particular, young people demand increasing of funding for construction, particularly in the part of the program “affordable housing” and “social housing.” They suggest using the money received from land auction for this purpose. Young people hope that the government will fulfill their promises to assist young families. We may remind that back in 2007 before the parliamentary elections many parties in their pre-election programs had slogans like: “25 percent of credit repayments after birth of the first child in a family, 50 percent—after birth of the second one, and complete repayment after birth of the third child.”

The list of demands included also eliminating corruption. Young people complain that bribes and kickbacks drive the cost of apartments so much that even in poor districts in large Ukrainian cities housing prices are higher than in European capitals. The rich need to be forced to share, the young people think. Everyone who has excessive living space, e.g. more than 100 sq. m. per person, should pay an additional tax, young activists say. According to their sources, there are buildings now in which half the apartments are empty because they are an investment rather than a place to live. Therefore, the proposed taxation mechanism should stimulate circulation of apartments and help solve the housing issue.

However, a number of the protesters’ proposals are unfeasible. In the comments the National Bank of Ukraine offered to The Day it advised the young people to “take off the pink glasses.” “From the viewpoint of the financial market, a seven-percent mortgage rate is unreal. In order to offer a loan at this rate to young people, it has to be taken out somewhere at the same rate. Now the government is borrowing money on the financial market at the weighted average of 12.58 percent per annum,” Ruslan Hrytsenko, deputy president of the NBU Directorate for Bank Regulation and Supervision, has told The Day.

At the same time, if the state does not lend an ear to the demands of young people, it risks losing its future, activists warn. “A country that does not care about conditions, particularly housing, for young families strips itself of its future. Statistically, up to 80 percent of children are born precisely in young families. A lack of housing also aggravates the brain drain. Housing problems are the cause of many divorces and a drop in the birth rate,” young activist Maria Kravchuk said.

Nevertheless, the young people still believe that that they will succeed in getting the problem off the ground. The government will not only use this painful issue as a carrot to manipulate the electorate but will also start fulfilling its promise. “It is in the interests of every young Ukrainian to force politicians to solve our real problems rather than blabber about convenient topics. If we continue to listen mindlessly and silently to their chatter, we have every chance of having children in rented apartments,” sums up Vitalii Shabunin, head of the All-Ukrainian Youth NGO “Foundation for Regional Initiatives.”

By Alla DUBROVYK, The Day