For instance, in Kyiv, the average cost of renting a one-bedroom apartment amounts to 68% of the city’s average salary. In Uzhhorod, it’s 87%, while in Lviv, it’s 80%. The lowest percentage is seen in Kharkiv, where rent makes up just 21% of the average salary.
Economic and safety context
Under normal circumstances, the lower the percentage of income spent on rent, the higher the standard of living in a given city. However, the war has shifted the dynamics. In Kharkiv, rent prices have remained low since February 2022 due to constant shelling and safety concerns, which doesn’t necessarily reflect overall prosperity but explains why some residents remain in unsafe areas.
On the flip side, Uzhhorod, located far from active combat zones, has seen a surge in rental demand, causing unusually high rental costs. For Uzhhorod, 87% of an average salary spent on rent is critically high, highlighting a disparity between rental prices and affordability.
The 30% rule for affordability
According to LUN analysts, the optimal ratio of rent to income should not exceed 30% of monthly earnings. This “30% rule” is a global standard for housing affordability.
In Western Europe, such as Germany and France, rent typically accounts for 25-30% of income. For example, in Germany, with an average salary of €3,741, rent makes up 27.6%, creating a balanced situation for most households.
In contrast, countries in Central and Eastern Europe with lower salaries often see rent consuming a larger portion of monthly income, despite relatively cheaper housing costs. In wealthier countries like Norway and Luxembourg, high salaries make it easier to manage higher rents.
Global approaches to rental challenges
Ukraine is not alone in grappling with expensive rent. European cities address the issue through measures such as:
- Rent controls: Setting limits on rental prices in specific areas to prevent speculation, though this can reduce the number of available properties.
- Social housing: Governments or municipalities construct housing to be rented out to low-income families.
- Youth and student support: Targeted subsidies aimed at keeping young people economically active in specific regions, especially in cities with large universities.
LUN’s brand and business director highlighted that these are not the only strategies. For instance, South Korea tackles rental challenges by building new housing stock and offering leases with refundable deposits (40-90% of the property’s value) instead of monthly rent payments.
Insights for Ukrainians
The LUN and Work.ua project provides valuable data to help Ukrainians understand how rent affects their overall well-being across different cities. By offering insights into the relationship between average salaries and rental costs in regional centers, users can make informed decisions about relocation, budgeting, or investing in homeownership.
Additional findings
As of October 2023, Kyiv caught up with Lviv in terms of rental prices, marking an upward trend in the capital’s housing market.
Research by LUN and NV also revealed that factors like air defense reliability, distance from combat zones, and proximity to Russia significantly impact Ukraine’s real estate market. Cities like Kyiv, protected by advanced air defense systems, and western cities like Uzhhorod and Lviv remain attractive to buyers.
By December 2023, 75.4% of new residential sales offices across Ukraine were operational. In Kyiv, 74.7% of these offices were active, with the highest percentage (97%) in Ternopil Oblast.