Wohnungsmarkt in Russland: Enttäuschende Bilanz

Press Release of May 30, 2001

Conditions on the Russian housing market have barely improved since the transformation of the country. Although the housing market grew by 13,8% to 2761 Mio m² in the 1990s there was also an increase in the number of households (homecoming soldiers, increasing divorce rates). Since flats in most regions are no longer distributed by the state there are hardly any reliable data on the number of persons seeking accommodation. A newly shaped housing market as well as extremely devious and partly shady methods determine the distribution of flats. The poor quality of the buildings and lacking maintenance are furthermore factors that contribute to the housing shortage. Although almost 90% of all residential buildings have been constructed during the last 40 years a great number of them has already fallen into disrepair
Stately Russian housing programmes for persons with a low or an average income have been drastically reduced in the 1990s. The state has almost withdrawn from the funding of housing facilities. In 1990 the state's share in the housing market amounted to 85%, a figure that dropped to 15% in 1999. Long term credits with steady conditions that could help to support the demand for self-used property are impossible to obtain. A market for private house funding has not developed since risks for private investors are not sufficiently covered.

A gradual deregulation of rents and incidentals should help to break even in the rental sector. Until 1992 rents had maintained on the level of 1928. In the last year real rents covered about 40% of the costs. Cost awareness in the administrative sector and among consumers is still little developed, which often leads to a waste of resources. The abolition of rent allowances for many sections of the population - even private property is still subsidised by the state -should give the state scope to increase housing benefits for those who are really in need. Only if the rental sector turns out to be profitable for private investors will the demand for flats being better met.