Prime Minister Vladimir Putin holds a meeting on housing construction in the Moscow Region


“It is now extremely important for us to develop a strategy that works, anticipates future needs and creates an effective and balanced supply and demand structure in order to ensure a stable housing market and, consequently, truly affordable housing for the vast majority of Russians.”

As Mr Putin said during the meeting, the federal government will not cut housing programmes for servicemen, veterans and other benefit recipients because of the need to provide emergency accommodations to wildfire victims. Next year, roughly 250 billion roubles will be allocated to housing construction for people entitled to benefits.

The prime minister said that the government would prevent housing prices from skyrocketing. As he emphasised, the government hopes to ensure that within four years at least 25% of Russian families can take part in mortgage housing programmes "without the risk of facing price explosions, housing pyramid schemes and fraudulent developers". Mr Putin called for regional housing construction programmes to be updated and to adopt them before January 1, 2011.

Vladimir Putin's opening remarks:

Good afternoon, colleagues!

Today we are meeting to discuss housing issues and the overall prospects for the housing market. We are meeting here in the Moscow Region, bearing in mind that the Moscow Region has performed well in this area. We have set ourselves the goal of building an average of one square metre per capita, per person, by 2020. The Moscow Region has already accomplished this task for itself - this is the fourth consecutive year it has reached such levels, including the crisis year of 2009, in which it achieved the same results and even a little better than one square metre per person. As you can see, there are good examples of quality construction; after all, this is economy-class housing - and the neighbourhood that we are in today is an example of this; there is quality construction here and the people are satisfied with the quality. We were just talking with the people - these are, as you know, residents of this neighbourhood, people who are not used to speaking with high-ranking officials, and they simply say what they think. And indeed, they are both satisfied with the quality and the social infrastructure, which includes a kindergarten, a school, a clinic, and a sports complex, where people can play a variety of sports. This is a good example of solving housing problems.

However, we must assess the situation objectively. And you and I know that in times of economic crisis, just as in many other countries, our construction industry faces some challenges - primarily with lending for new construction projects and the solvency of demand.

As you know, housing construction was slightly down last year, decreasing by a bit over six percent.

But in general, due to massive public support, we have managed to maintain the status quo. During 2009-2010, we invested very serious money - more than one trillion roubles - in housing programmes to support mortgages and the construction industry as a whole. As a result, we have not only made serious progress in sorting out people's housing problems, we have maintained the potential for reconstruction and the development of construction and related industries.

Housing construction is up in 37 regions of the Russian Federation. From January to June 2010, 21.6 million square metres of housing was commissioned. This is almost the same as in the first, pre-crisis months of 2008, and about 60 million square metres of housing is expected to be built in 2010.

Clearly, such figures were achieved, among other things, thanks to the completion of construction projects that were started two or even three years ago. But this is good news - the situation is still improving, and we see that the number of newly built foundations is gradually increasing and a reserve has been formed for commissioning housing in 2011-2012, although, of course, it could be bigger.

We must therefore continue with our targeted support of the construction industry. And I want to stress that we will surely complete our programme of providing housing for veterans, military personnel, military retirees and other groups.

Here, in the yard, I was approached by a woman holding a child - the wife of a soldier - who asked me whether the programme of housing for servicemen will continue. One of the goals of our meeting today is exactly this - to confirm that, despite the fact that the government has assumed additional obligations to build housing, purchase flats for people who have suffered from fires, and lost their homes due to fire, we will not change our housing plans for all of these other groups. I repeat, we will not make any changes in our plans for the military - meaning permanent housing for the military under the Service Flats Programme - as well as housing for veterans and other groups, with the exception of some earlier adjustments related to service housing that were announced before the fires began. But this is how we understand the situation, which is not particularly pressing. We promised to provide permanent housing for active duty troops first, and we will not delay these vital plans.

And here, not far from our current location, I toured a very good neighbourhood with the governor that the Ministry of Defence is building, with nearly a million square metres of housing. Again, all of these programmes will be implemented. In the coming year, we will allocate 250 billion roubles from the federal budget for all of these purposes.

However, the government cannot always be the principal client and homebuyer; otherwise, we risk creating a distorted, monopolised market structure, squelching the development of a mortgage system and other modern tools for solving housing problems. Well, the result, as we all know, is growing waiting lists for housing and so on.

In this regard, it is important that normal market demand starts emerging now once again. And this is the new pleasant circumstance to which I wish to draw your attention - normal market demand is returning. During the first half of the year, the value of mortgage loans exceeded 133 billion roubles - an increase of almost 250% year-over-year.

Overall, analyses show that the demand for housing is recovering even faster than supply, and accordingly, there are risks that we must take into account. What am I referring to? A possible repetition of the pre-crisis conditions, when we were faced with rapid growth in house prices - this is what we must not allow in any case. We must not allow the emergence of various kinds of bubbles and distortions, when the development of a mortgage system and stimulation of demand are happening by themselves and evolve quite rapidly and energetically, while the volume of new housing, power, and the building materials industry is clearly lagging behind. So now it is extremely important for us to develop a strategy that works, anticipates future needs and creates an effective and balanced supply and demand structure in order to ensure a stable housing market and, consequently, truly affordable housing for the vast majority of Russians.

And, of course, we must continue to ensure that as many of our people as possible can resolve their own housing issues through mortgages, their own equity and progressive joint construction programmes. And of course, it will be possible with properly structured government policy.

Our mission is to ensure that in just four years at least 25% of Russian families can afford to invest their savings and federal subsidies for multiple-child families in housing, take out a cheap mortgage and successfully handle the fluctuating prices, housing pyramid schemes and unscrupulous contractors on the market on their own. Now, let me remind you, the figure currently stands at 17%. We need to reach at least 25% in four years.

To achieve this, we need a substantial increase in housing construction, and, I repeat, we need this in the coming years. Therefore, we have taken a number of decisions to encourage new construction projects and reduce the final cost of housing. I am referring, first and foremost, to removing administrative barriers, which we've been talking about a lot recently, and sparing developers various economic and bureaucratic costs and simplifying planning documentation.

Our objective is to speed up the allocation of land for construction. This applies to all categories of land - federal, regional, and municipal.

Finally, the principles governing the preparation of design and construction documents need to be revised, so that the process of pricing in the construction sector is extremely clear and extremely transparent. I want to emphasise - as I have already mentioned, and I'll repeat once more - our benchmark is to build at least one square metre of housing per person per year. We should try to reach 100 million square metres by 2016 and 142 million square meters per year by 2020.

At today's meeting, I would like all speakers to objectively focus on what further steps need to be taken to increase construction volumes.

And of course, we must set new standards for quality and comfortable accommodation, maintain technical regulations, construction regulations and take into account the requirements of the law on energy efficiency, which comes into force on January 1, 2011.

The Development Fund for Housing should lead the way in terms of introducing new approaches. This applies to systematic development projects, the introduction of advanced technologies and materials and modern standards of housing comfort. The Fund is carrying out such work, but we must scale up.

We should place particular emphasis on increasing the share of economy-class housing. By as soon as 2015, it should increase to 75% of the total housing stock in the country.

I want to stress that the concept of economy-class housing does not mean that such housing should be bland concrete boxes, or miserable second-rate housing. Economy is, above all, affordable homes and quality that meets modern standards of comfort, energy efficiency and environmental performance. This includes low-rise buildings. A good example of this can be found right here.

In order to achieve our strategic plans, we must mobilise the resources of federal programmes and regions, linking the capabilities of development institutions, including Vnesheconombank, the Agency for Housing Mortgage Lending, public utility funds, the Federal Fund for the Development of Housing Construction and so on.

I would like to use this opportunity to instruct Vnesheconombank to prepare proposals for one of the next meetings of the supervisory board on the issue of financing development projects in the building materials industry and provide an analysis of the results of the bank's efforts to stimulate the mortgage market.

What have we set aside for this purpose? 250 billion roubles have already been invested in solving this problem. How does this work in practice?

Now, regarding regional housing construction development programmes, obviously they must be updated, including strengthening the focus on the economy-class market segment, which I already mentioned twice. The updated programme must be approved before January 1, 2011.

Please provide the constituent entities of the Russian Federation methodological assistance in the development of such documents; coordinate and supervise this work.

We must clearly understand how much land each region will need for development, what investments should be made in infrastructure, the modernisation of the building materials industry and so on.

Let me remind you that the development of housing is identified as one of the criteria for evaluating the effectiveness of regional government agencies and governance. And we will very carefully monitor the situation in each constituent entity of the Russian Federation.

And, of course, we must think about supporting initiatives in the regions both through federal grants and other financial instruments, and providing incentives for the regions that are showing progress in the development housing construction to keep up the momentum.

I would like the Ministry of Regional Development and the Finance Ministry to decide on how much financial support is needed for regional programmes and the principles governing its distribution.

Of course, such support mechanisms for the regions should be reflected in the federal targeted programme, Housing, which we will review in September at a government meeting.

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