HOUSING PRICE COMPARISON BETWEEN
KAZAKHSTAN AND FORIENG COUNTRIES
Doctor of economic science, Associate
Professor at the Department of management in Public Health and Pharmacy http://management.kaznmu.kz/
Real estate prices in many countries of Europe and America are higher than the are in Kazakhstan. However, the level of the
population income often considerably exceeds the Kazakhstan income rate. The Richmond Realty company found
out to
what extent the housing purchase is available
for the average Kazakhstan
citizen and this indicator was compared to the indicators of six other countries in the world.
To define the degree
of housing affordability we have
compared a definite situation in different
countries and cities by three criteria [1]:
1. Number of square meters of residential real estate that can be obtained with an average salary.
2 . What
share from the average salary the monthly mortgage payment
takes?
3 . Number of years required for apartment purchase at present prices.
The
basic data used for this were: the cost of housing square meter in each of the
countries and in each estimated city, the level of average salary and the minimum rate of mortgage crediting available at the relevant market at
the time of drawing up a rating. All prices are given in US dollars at the exchange rate to the time of rating compilation [2].
The price of the conditional apartment of 60 sq.m in the respective city
or country was used for assessment of mortgage expenses and number of years for
purchase. The crediting term amounted to 20 years and the size of initial
contribution - 30%.
The USA became the rating leader as it provided with the most affordable
housing in certain cities, as well as in the whole country [3]. So the American
citizen with the average salary (4140 USD) is able to buy 3.34 sq.m of real
estate (1238 USD for sq.m) whereas the Kazakhstan citizen with the average
salary (718 USD) can afford to buy only 0,6 sq.m of the real estate in
Kazakhstan (1156 USD for sq.m).
Unfortunately, Kazakhstan in the ratio of salary to mortgage payments is
far behind not only the USA but also other six countries that have place in the
rating. Taking into account the fact that today in the USA it is possible to
obtain a mortgage loan on a rate of 2.5% per annum and in Kazakhstan it should
be not less than 12.5%, the average American gives only 6,64% of the salary for
mortgage payment (276 USD monthly) and the Kazakhstan citizen has to pay more
than 76% (551 USD).
Due to the affordable mortgage credits with floating rate attached to
the international rates of interbank financing of LIBOR and EURIBOR in Russia
the average Russian citizen who can pay 60% of the salary for mortgage gets the
wind of the average Kazakhstan citizen.
Germany occupies the second place in the
rating of countries on housing availability. An average Germany citizen can
afford to buy 1.89 sq.m of real estate by one salary and it is possible to earn
for the apartment in 2.5 years [4]. Spain takes the third place in this rating
but has the lowest mortgage rate (1.76% per annum) among the other countries.
The average Spanish with a salary of 2528 USD can buy about 1.3 sq.m of
residential real estate and will give 16% of a salary for mortgage service.
Bulgaria, Great Britain and Kazakhstan are
respectively located on 4, 5 and 6 places of the rating. Russia in the ratio of
salary (849 USD) to housing cost (1,628 USD for sq.m) holds the last place of
the rating.
The first three places in the rating of
housing availability are held by the American cities: Las Vegas, Chicago and
Los Angeles. Further there are British Manchester, German Cologne and Spanish
Torrevieja. Berlin, Miami, New York and Spanish Alicante round out the top ten
of the cities.
It is curious that in Las Vegas which is the
capital of the USA gambling business and the leader of our rating it is
possible to get more than 5 square meters with the average salary, though the
cost of one housing square meter there amounts to 903 dollars. At the same time
in Kostanay (18th place in the rating) where the real estate price has already
become equal to the price in Las Vegas (883 dollars) the citizen with the
average salary can buy only 0.59 square meters. The situation in Karaganda
seems to be a little better (17th place) as its citizens can buy 0.62 housing
square meters with their average salary.
The Kazakhstan capital cities rank even the
lower place in the rating (Astana - 19th place, Almaty - 22nd). For example,
Almaty citizen with the average salary (952 USD or 144.3 thousand tenge) spends
98% for monthly mortgage payment (938 USD or 142.1 thousand tenge monthly)
whereas Barcelona citizen gives less than one third (30.69%), Madrid - about
one quarter (26.52%), New York - the fifth part (18.06%), Berlin - about 16%,
Manchester and Los Angeles - 13%, and Chicago - less than 7%.
Despite the equal housing price level in
Almaty and Astana the capital citizen is in a little more advantageous position
due to the higher average salary (1025 USD or 155.3 thousand tenge) as s/he has
to pay about 92% of a salary or 945 USD (143.2 thousand tenge) on mortgage.
It is remarkable that Astana takes adjoining
positions with London in the hosing availability rating in respect of ratio of
the average salary to housing square meter cost, though it considerably loses
by criteria of mortgage/salary (92% in Astana and 44% in London). The average
Astana citizen as well as the average Londoner will be able to buy only about
one half of square meter by one salary and it will take approximately 9 years
and 8 months for them to buy the two-room apartment.
Moscow has appeared to be an outsider of the
housing availability rating as Moscow citizen with the average salary can
afford to buy only 0.3 square meters and the mortgage payment amounts to 99.8%
of salary. The Muscovite will be able to buy the apartment only in 16 years.
The data analysis points to an obvious
imbalance between the price level on real estate and income level of the
population in Kazakhstan. Furthermore, the imbalance is more considerable in
capital cities. In spite of the fact that the real estate cost in such cities
as Madrid, Berlin and New York is for many times higher than in Astana and
Almaty, the high salary rate increases the chances to make a housing purchase
in Europe and the USA.
It sounds unbelievable but it is much easier
to buy the house in London or New York for the local citizen than to buy it in
Almaty for the Almatian. The housing in Barcelona, Manchester or Los Angeles is
more affordable than it is in Kostanay or Karaganda [5]. Unfortunately, in the
countrywide rating of housing affordability Kazakhstan gives way not only to
the developed Great Britain and crisis Spain but also to agrarian and tourist
Bulgaria.
Except disproportionate high housing prices
there is a problem of mortgage crediting in Kazakhstan. Taking into
consideration that the average Kazakhstan citizen will have to save up for the
apartment of 60 sq.m for not less than eight years monthly postponing the whole
salary, the credit housing purchase becomes the only acceptable option for the
majority. High mortgage rates in Kazakhstan provided the cities with four
penultimate positions in a ratio of monthly credit payment to the average
salary, having outstripped only the capital of Russia. Kazakhstan has the
highest crediting rates among the compared countries.
For the purpose of making equal the housing
affordability levels in Astana and New York the price for one square meter
should be reduced to 833 dollars or the average salary should be risen to 2 417
dollars. Implementation of one of these options in foreseeable prospect is
improbable.
The positive examples of the real estate
markets in the countries of Latin America prove that one square meter of
economy class housing can cost 250-300 dollars.
In Caracas it is planned to build more
than 40 000 apartments instead of Fuerta slums for the indigent population and
the housing accommodation will be given for them absolutely free of charge. The
cost of one housing square meter will amount to merely 250 dollars and the
apartment of 40 sq.m will cost 10 thousand dollars.
At present time, according to official
sources 342 586 houses and apartments are under construction in Venezuela.
Besides, in the nearest future the construction of 2 512 houses with the help
of population and support of the Ministry of social protection of the
population, the state company "S. A. Petroleos de Venezuela" and
regional corporations will begin.
After 29 months from the moment of
launching the state program "Great housing mission of Venezuela"
developed specially for the solution of housing deficiency in this South
American country, 450 408 houses have already been built. Thereby, the
government strives to provide till December 31 with a worthy housing accommodation
all needy families that live in shelters after destructions caused by pouring
rains in previous years. "Great housing mission of Venezuela" intends
to construct 3 million houses by 2019.
List of used literature
1.
Foreign experience of state regulation of the
housing sphere: economical and legal aspects // 2012 ( online resource): http://metropolys.ru/
artic/21/01/c-0024-03254.html
2.
The state stimulates housing construction//
2013 ( online resource):
http://www.orangesmile.com/ru/netherlands/netherlands-stroitelstvo.htm
3.
Experts predict to the housing market of the
USA growth by 5%// 2012 ( online
resource): http://www.kn.kz/ru/news/view/id/40968/
4.
State housing policy of Germany// 2011 ( online
resource): http://www.inestate.ru/pub/0/0/2289
5.
Materials of meeting of the Government of RK.
2013// ( online resource):
www.zakon.kz/kazakhstan/4556346-onlajjn-transljacija-zasedanija.html