The cost of economy-class housing should not exceed 30,000 roubles per square metre, said Russian Prime Minister Vladimir Putin. The government is willing to buy out apartments from construction companies at this price.
Mr Putin said this at a meeting of the presidium of the presidential council on priority national projects and suggested that at least 40% of Russians could afford such apartments. Current housing prices are several times higher than the Prime Minister's price. According to the IRN.ru analytical centre, the maximum price of Moscow apartments in panel buildings was registered on September 8, 2008, at $5,913 (147,970 roubles) per square metre. Since then, it has dropped by 37%, to $3,650 (115,194 roubles, minus 22%).
However, the government will not force construction companies to lower housing prices. It intends to buy out apartments at up to 30,000 roubles per square metre for persons entitled to social benefits, such as servicemen or people living in dilapidated housing, a government official explains. It is true that construction companies are not always willing to offer finished apartments at this price, therefore the government has decided to place orders among property developers for new housing.
Currently, the government is the largest buyer in the housing market. In 2009-2010, the Defence Ministry may spend about 200 billion roubles on housing for servicemen.
The price of 30,000 roubles is made up of construction costs plus a 10% margin for construction companies, a high-ranking official from the Ministry of Regional Development said. According to him, this price is to apply to all regions, including Moscow and St Petersburg. Apart from construction costs, the price estimate includes the cost of the land. Alexander Braverman, director general of the Federal Fund for the Development of Housing Construction, says a price of 30,000 roubles is achieveable, at least for apartment buildings to be built on the Fund's lands. He also said that the government could give big land plots to construction companies and provide them with the infrastructure. Then, the builders will only have to put up the structure which costs about 22,000-25,000 per square metre. The companies could earn a lot by building more housing, Braverman says.
Yelena Baturina, president of the Inteco closed joint-stock company, called the 30,000 roubles price realistic "if all infrastructure works are carried out at state expense." She also told Mr Putin that it would be advisable to develop integrated house-building plants with the help of state banks. "It would be both acceptable and timely to combine private and public funds," she said. Vladimir Putin did not reject the idea.
"We must analyse the issues related to building fabrication plants and the state's possible participation in these programmes; at least, we must look into the possibilities of a private-public partnership and decide what can be done in this respect," he said.
Alena Chechel helped to prepare this article.
Bela Tovkailo