BOFIT Weekly Review 2016/10
Growth of housing production slowed
Housing construction contracted slightly last year. Rosstat reports that the total volume of new apartments completed in Russia last year amounted to 84 million m² (measured in liveable floorspace), which was nearly the same volume as in 2014. Construction of detached and semi-detached housing, however, fell clearly, while state-supported housing production was up slightly. As a result, Moscow, for example, last year saw completion of a record volume of new apartments (17 million m² in liveable floorspace).
The slight decline in average apartment prices reflected growth in supply and the lack of eligible buyers. The nominal price of new apartments in rubles fell 2 % y-o-y, while prices of older apartments sank about 4 %. The price variations and shifts across regions were considerable, however.
Even with housing prices propped up in part by government-subsidised interest rates for new housing loans, the value of apartment loans granted by banks was down 35 % last year. The interest subsidy programme, earlier set for phase-out at the end of March, has now been extended to the end of 2016. About 40 % of apartment loans issued last year qualified for interest subsidies. While the role of bank loans in financing purchases of apartments has increased, less than a quarter of apartment purchases in Russia are financed with bank loans.