Prime Minister Vladimir Putin holds a meeting in Kirov on housing construction in the regions
3 february 2011
Vladimir Putin's opening remarks:
Ladies and gentlemen, at the end of 2010, as you know, we adopted a new federal targeted programme on housing through to 2015. Investment under this programme from all sources will total over 600 billion roubles.
But it is not only financial parameters that matter. In effect, we are laying down new approaches and setting more ambitious goals for our housing policy. We should put the crisis behind us for good and restart the housing drive. In the next five years, there must be 50% growth: from 58 million square metres in 2010 to 90 million square metres in 2015. We must build almost 370 million square metres of new housing over the course of the programme. As early as 2016, we are planning to build 100 million square metres, and 142 million square metres in 2020.
These are quite realistic plans. The industry has a positive head start: there are already new buildings laid down and scheduled for completion in the current and coming years. Last year, 52 Russian regions maintained, and some increased, the number of housing completions. We will get in touch with some of them through a video conference link today. Incidentally, as the Ministry of Regional Development tells us, in 2010, 58.1 million square metres was finished and turned over for tenancy, or 97% of the 2009 level. As you see, we had a slight drop across the country, overall.
We need a sizeable increase in housing construction to balance out demand and supply and thus guarantee the predictability of the housing market, to ensure it against risks of jumping prices, or better still to reduce housing prices, giving people a real chance to buy their own flat or house.
What we need is not abstract square metres, but the availability of quality residences for people and solutions to the housing problems of real Russian families. This should be the main, basic indicator of the efficiency and productivity of our efforts in this area. This is why we will continue to press with our plans to provide housing for veterans, service members, military retirees and other categories of the population for whom the state has direct obligations – I am referring to those living in the Far North, to forced migrants and Chernobyl victims.
We will support young families and together with the regions provide them with subsidies so that they can qualify for mortgage programmes, as is the case here in the Kirov Region under Governor Nikita Belykh’s direction. We expect over 150,000 families to enjoy improved housing with state help in the next five years.
We should make sure that as many people as possible can obtain housing through various means. In 2015, for example, no less than one-third of Russian families should be able to buy housing with their own or borrowed funds, through housing loans, welfare subsidies or maternity capital. The current figure is 12%.
Last year we saw recovery in the mortgage loan market. The amount of housing loans issued increased by 150%. The average mortgage rate fell, though is still high – 13.2%. It dropped from 14.4% to 13.2%, but should be lower. Mortgage loans should be more readily available. In 2010, 250 billion roubles were allocated for mortgages and for the refinancing of mortgages. VEB and the Agency of Housing Mortgage Lending will be involved in the process.
But the problem goes beyond just the housing market. To cut the cost of housing loans further, inflation should be controlled, and all key macroeconomic indicators stabilised. We intend to do so by giving priority to these issues.
In November 2010, monthly mortgage rates in roubles reached 12.6%, with an all-time low reported in the first quarter of 2008 at 12.4%. We are approaching this level now.
In 2011, we plan to issue 540 to 580 billion roubles in mortgage loans. The all-time high was recorded in 2008 – 650 billion roubles. I think we will reach this figure in 2012.
The quality and comfort of housing should be a special priority. Outdated technology and faceless and drab-looking concrete boxes of buildings are not a proper solution. We need advanced architectural and building ideas, including for low-rise housing. Energy efficiency and safety should meet the latest standards, and new blocks of flats should have kindergartens, school, clinics and sports centres near them. People with disabilities should also be considered.
Today we visited the Sunny Shore residential neighbourhood in Kirov. The project was implemented on the land plot allocated by the Housing Construction Assistance Fund with the Fund’s assistance. You can see that a novel approach was used here. I have just talked about it with the governor. This is affordable, modern housing of high quality that is reasonably priced. The prices of housing in this neighbourhood are lower than on the primary housing market in Kirov, 26,790 roubles per square metre against 32,000.
It is important that the Housing Construction Assistance Fund has become the force capable of setting the tune in the construction industry in terms of quality and retail cost. As for quality, they use energy-efficient technology, including new window frames and new construction materials. Overall, this is a good project. We hope the fund will continue to assist in land development, in preparing property for construction, and in general, facilitating the whole process.
I think we should provide the basis for ensuring the operation of the Housing Construction Assistance Fund in the long term, supplying land and in this way indicating our intentions to the fund’s partners and potential investors.
To begin with, we should extend the moratorium on the departments’ and organisations’ right to use federally-owned land, and restrict the rezoning of these land plots under various pretexts. This land must be turned over to the Fund for housing construction.
In 2012, up to 30% of housing should be built with the assistance of the Housing Construction Assistance Fund. When signing contracts, the Fund will insist that the contractors use modern construction materials and technology, as has been done here in the neighbourhood we visited today. By the way, I think that we should buy housing for state purposes at substantiated prices and also demand that contractors use modern materials and energy-efficient technology.
Ladies and gentlemen, it is the regional and municipal authorities that should take on the brunt of following through on housing construction. We previously agreed that all Russian regions would draft, using the assistance of the Regional Development Ministry, or upgrade their programmes of increasing housing construction by January 1, 2011. They have done this, and I want to express gratitude to the heads of all the regions that have done this. And now they must implement these plans.
This is what I’d like to tell you.
First, administrative barriers should be further eased and the procedure for coordinating project requirements and allocating land, primarily for economy-class and low-rise housing, should be further simplified. According to the plan, the percent of economy-class housing should grow to 60% in 2015.
Second, we have agreed that the drafting of all zoning documents must be completed as soon as possible.
Third, we should also develop a comprehensive social, housing and utilities infrastructure. Currently, lack of such infrastructure hinders the construction and commissioning of residential blocks. Housing and utility services can and must be effective.
Fourth, we should promote competition in the regional construction markets. We must not cater to monopolists or allow only “friendly” contractors to take part in tenders. At the same time, we must prevent situations where companies that have neither the qualifications nor the construction facilities cut prices unreasonably and use shady means to win tenders. And then they turn the project over to a subcontractor, getting a percent. We need a relevant policy; I don’t think this will be difficult. Simply, bidders must be informed about the requirements for developers and construction companies: they must have working capital, equipment, personnel, experience, and completed construction projects in their portfolios.
Fifth, authorities in the regions should support and modernise the local construction business, encouraging it to produce energy-efficient construction materials. I want you to know that we will analyse year-end results to see how the regional programmes have been implemented and if the housing construction and commissioning targets are achieved. We will offer incentives to those regions which achieve the best results in housing construction. As much as 21 billion roubles has been stipulated for this purpose in the federal targeted programme of housing development.
And one more important thing: we should strictly coordinate the regional programmes and the housing construction plans of the various federal departments involved, so that the residential blocks for servicemen and other groups of citizens are not built in the middle of nowhere. They must be built as part of towns and villages, so that those who receive these flats will be able to use available approach roads and social facilities and also have employment opportunities.
This is extremely important. This coordination of programmes, departments and regions can and must be ensured by the Ministry of Regional Development.