The importance of the financial sector for the development of housing construction is difficult to overestimate. Over 10 months, 37.7 million square meters of housing were commissioned in Russia, and 59 million square meters of housing are expected by the end of the year. This is approximately 1 trillion 800 billion rubles of orders received on the market for construction materials, salaries of builders, and contracts with organizations in related industries. The main source of funds was the state - 600 billion rubles. Most of the remaining amount came from banks and financial institutions.

Not least thanks to these resources, a whole series of signals have emerged indicating a revival of the market.

This year, the financial result of construction industry enterprises amounted to +49.6 billion rubles (profit of profitable ones –

107 billion rubles, loss of unprofitable - 57.5 billion rubles). The share of profitable organizations over the year increased from 66.2% to 67.8%. There is a 10% increase in investment activity in construction compared to last year, an increase in the volume of construction work, an 11% increase in the production of basic building materials.

All this shows that construction is reviving. In terms of housing commissioning per capita, Russia continues to outpace most countries of Eastern Europe and the CIS. This indicator in our country is twice as high as in Bulgaria; almost 1.5 times higher than in Hungary, Estonia and Lithuania. But we are still 2-3 times behind Western European countries.

It is necessary to create an environment in which construction will be most effective, with a special emphasis on eliminating the barriers that have hindered the development of construction in previous years.

Measures taken

We are taking systemic measures to reduce the financial and time costs of builders when commissioning housing, replacing the supervisory model of relations between the construction community and the state with a partnership model.

A plan is being implemented to eliminate unjustified administrative barriers in construction, which sets the task of forming a minimum necessary closed list of procedures that determine the state’s participation in the implementation of projects.

In December, the formation of a new pricing system in construction will be completed. Its main result will be the abolition of indexation of the cost of work, which causes so much negativity.

We have sharply accelerated the updating of previously approved building codes and regulations. By the end of the year, we will approve 25 updated building codes and regulations, and 55 SNiPs are already in development.

The Russian Ministry of Regional Development is also implementing a plan to develop national standards in the field of construction for 2010–2012, in accordance with which 163 standards will be developed.

In mid-November, a draft law was submitted to the State Duma, which envisages the introduction of a new auction mechanism for the sale and lease of land plots. The winner will be the one who reduces the sale prices of housing built on these plots as much as possible.

On November 9, we submitted to the government the Strategy for the Development of the Construction Materials Industry. It provides for the development of production of affordable construction materials that are most in demand by the market.

All this will allow builders to free up funds to expand the scale of work and increase their need to attract financial resources.

New "Housing"

In November, a new federal target program, "Housing," was approved for 2011-2015. Its total funding is almost 621 billion rubles, including 291 billion rubles from the federal budget. At first glance, this is not a lot of money. But it should launch the process of attracting funds from private investors and the population.

In total, the program initiates the attraction of more than 2 trillion rubles per year into housing construction. If in 2009-2010 the state supported the industry, replacing private money with federal money, then during the program we are launching the reverse process.

The new program is fundamentally different from previous documents. If the Housing program of 2002–2010 allowed the creation of the necessary institutional environment, the new program will coordinate the actions of all participants in housing construction, all programs and projects that affect the housing market, including federal, regional and municipal ones.

For the first time, absolute indicators of housing commissioning in each region by year were used as a basis, on the basis of which a network schedule was compiled for reaching the commissioning of 1 square meter of housing per person in the country as a whole by 2020.

Each subject of the Federation has developed its own program consisting of specific measures to remove regional and local administrative barriers. They provide for the mandatory development of territorial planning documents and urban development documentation; separating the process of providing engineering infrastructure for developed areas into a separate business, developing the construction industry, training personnel and other measures to improve the comfort of work in the construction market.

The result should be a sharp increase in the volume of housing construction – 2.5–3 times (the program of the Republic of Chuvashia – 3 times, the Republic of Dagestan and Sverdlovsk Region – 2.5 times).

As a result, the Ministry of Regional Development sees where and how much housing needs to be built, when it is necessary to hold a competition to select developers and launch construction, what volume of credit resources should be planned for developers and apartment buyers by the Housing and Utilities Lending Agency and banks.

The program provides for the introduction of 370 million square meters of housing over 5 years. The annual volume of housing introduction will increase to 90 million square meters by 2015, 60% of which should be economy class housing.

We believe that the proposed measures will increase the share of families who will be able to purchase housing using their own and borrowed funds – from 12% to 30%. Today's client base for mortgage lending will more than double.

We are also developing principles for organizing the rental housing market, determining the legal and regulatory framework for stimulating the construction of housing for commercial rent, and developing financial models for the construction of rental housing.

Among the main elements of the new Housing program:

- financing the construction of economy-class housing through loans provided to developers, based on the principles of project financing. It provides for the initial investment of funds by the developer, separation of the risks of implementing the investment and construction project from the risks of the developer itself, and the use of all assets of the project company as collateral for the loan;

– attraction of funds from citizens – participants in shared construction on the following payment terms: upon conclusion of a shared construction agreement – 10% of the sale price of economy class housing, fixed in the terms of the auction for the provision of a land plot; after completion of construction – 90% (20% – from the participant’s own funds, 70% – from a mortgage loan).

The greatest effect can be achieved if, out of 1 ruble of federal funds allocated to support the market, at least 70 kopecks are directed to the primary market and developer lending at the construction stage.

I believe that in Russia there are great prospects for work on the further development of interaction between the financial sector and the housing construction sector.

Mortgage: Working Together