That is according to the new May decree issued by the Russian president this year to expand on the current reform of the mechanisms for financing residential housing construction: accessible mortgages are to remain the main tool for tackling housing problems while the current market trends are going to help the government's plans, the Rossiyskaya Gazeta writes.
The annual growth in the amount of housing being commissioned every year in 2018-2024 must be at least 7.3%.
Inflation remaining at all time low despite the volatility of the Russian ruble exchange rate should allow the Bank of Russia to keep reducing the key interest rate, which, in the medium term, should ensure the country can meet the average mortgage interest rate targets. In addition, worker pay in 2017 rose by 7.2% while the average prices in the new housing market increased by just one percent; this should also help improve the living conditions for the majority of families, deputy head of the Analytical Center Gleb Pokatovich told the newspaper.
Earlier the government approved a road map to replace co-financing of construction projects with bank loans and to start using escrow accounts to temporarily keep money and pay it out to development companies only after they have performed their obligations, Mr Pokatovich pointed out. "The transition to the new scheme should begin on July 1, 2018 and should be completed by the end of 2020, it does entail the risk of a possible increase in housing prices as developers will have to pay more interest," the expert noted. "The government has to find a way to minimize this risk without compromising the improved protections for the buyers of new housing."
The decree requires that housing construction be increased to at least 120 million square meters a year by 2024. This should ensure improvement in the living conditions for at least 5 million families per year. To achieve that, the annual growth in the amount of new housing being commissioned every year in 2018-2024 must be at least 7.3%, the expert estimated. In Q1 2018, the amount of new housing being commissioned was up 20% year on year thanks to a sharp increase in the commissioning of private houses (72.5%). Cheap mortgages should prop up the market for new apartments, Mr Pokatovich concluded.
Source: The Rossiyskaya Gazeta