Stimulating House-Building to Overcome the Recession

1 september 2016

“In Russia, like in other countries with a historical lack of modern housing, the growth of house-building must maintain steady positive trends for many decades that will be imposed by general fluctuations in the economy and effect of the economic policy,” write experts in Private Housing Construction, a new bulletin regarding conditions of the Russian economy published by the Analytical Center.

According to the experts, private houses built by people (using own or borrowed funds) stably accounted for 43-44% of the total housing area commissioned in Russia in 2010-2014, but their share fell to 41% in 2015. According to estimations, this indicator can exceed 50-55% in reality.

The authors note that the housing area commissioning trends were negative in annual terms for exactly 12 months: from June 2015 to May 2016 (first of all, due to the high base effect - fast housing commissioning in the first year of the crisis). The fall of private house-building affected most Russian regions in 2015-2016. The key exception was the Moscow Region, where housing commissioning increased materially in 2015 (+1.5 mln square meters and +11,500 individual houses per year); the indicators began to decline in H1 2016, according to recent data.

Reaffirming the need for developing private house-building, the experts say that maintaining a sustainable renewal process and extending the housing fund in Russia also  largely influence trends in purchases of durable goods by households: furniture, home appliances and IT equipment. To overcome the current recession (both in the construction area and in the entire economy of the country as a whole), we need to stimulate not only the construction of apartment buildings, but also the private housing sector that is more sensitive to fluctuations in real income of families.

Please see more details in the Private Housing Construction bulletin.

For other issues of our bulletin on current trends in the Russian economy see Publications.

This and further bulletins are the continuation of the series Bulletins of the Social and Economic Crisis in Russia. Now the series is called Bulletins of Current Trends in the Russian Economy.

Photo from open sources.