Russia is in short of 1.7 billion sq. meters of housing units, according to the government’s estimates.
Photo: Dmitry Kostyukov
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Moscow Realty Prices to Remain Lofty in 2007
The yawning gap between the number of housing units in Russia and international realty standards show that Russian real estate market is very promising long-term-wise, analysts at the Trust bank say. 20.8 sq. meters of housing accounts for one person in Russia, which is 125 percent less than in Hungary (30 sq. meters) or half as much as in Western Europe. Not counting the housing in need of overhaul, only 13.5 sq. meters accounts for every Russian.
Russia is in short of 1.7 billion sq. meters of housing, according to the government’s estimates. It will take 16 years to bridge the gap if the number of new housing units grows 10 percent annually. The goal seems a feasible one as the growth this year was 14 percent, the Center Development estimated. Russian regions will be leaders in the growth. Next year the growth rates are likely to be preserved, analysts say. Moscow, however, is still at the level of 2005 with 4.7 million sq. meters of units built annually.
The Russian capital seems to do nothing to encourage the boom of affordable housing. The number of new houses built is declining as prices are going up. Prices on Moscow apartments soared 88 percent this year, the IRN center reports. The price hike has stopped, though. What is more, prices on low-cost housing have started to fall with supply adding 75 percent, compared to this summer. The supply has climbed to the level of 2005. Analysts say, however, that housing prices will not fall to the 2005 levels but may lose 10 or 15 percent. In six month’s time prices are likely to pick up again, but they will be rising at a lower pace, experts at Trust and IRN say. The overall price rise in Russia will amount to 20 percent, according to Alexey Demkin from the Trust bank.
In 2008, Moscow will also start building more as construction firms have realized that they cannot augment profits only at the expense of price. The prices have reached their top margin – at least in the low-cost housing segment, experts note.
www.kommersant.com
All the Article in Russian as of Dec. 22, 2006
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