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ABSTRACT
Given Russia’s public policy of increasing affordable housing, this study estimates its achievements. It highlights future obstacles and argues for modernization. Statistical estimates of housing affordability indicators in Russia generally and in major Russian metropolitan areas specifically show trends of substantial increase for the past 15 years. Although the housing affordability indicators are imperfect measures of actual levels, they are useful for monitoring trends. The affordability indicator trend in Russia differs from similar indicators for other countries. The main influencing factors for growth in housing affordability in Russia include a reduction in real housing prices, which declined faster than per capita real income, and a decrease in mortgage interest rates. Moreover, market housing pricing is influenced by housing supply. Nonetheless, extending the potential of housing affordability through lower interest rates has been largely exhausted, and further housing affordability may be achieved by increasing the stock and tenure types of affordable housing, including affordable renting.
Acknowledgments
This work was supported by the Institute for Urban Economics Endowment and the Basic Research Program at the National Research University Higher School of Economics. The housing affordability estimates in major Russian metropolitan areas are cited in the Institute for Urban Economics report titled An Analysis of Housing Condition of the Housing Sphere in Major Russian Urban Agglomerations, ordered by DOM.RF. We appreciate the support of our colleagues Alexander Puzanov and Alexandra Gershovich, who gave valuable comments and suggestions on earlier drafts of the article. The authors are fully responsible for the results and any remaining errors.
Disclosure Statement
No potential conflict of interest was reported by the authors.
Notes
1 A total of 6,275 transactions in 2016. This is balanced by the free provision of ownership (including privatization) and unclassified transactions.
2 In Russia, despite the absence of such a concept, a similar approach is used to provide housing allowances for social public housing tenants with low income. The same housing allowances could be provided to housing owners and renters of private housing with low incomes, but the amount of the allowances is calculated based on the low rent for social public housing. It does not cover the real expenditures of housing owners and renters of private housing.
3 Rosstat changed the system for weighting housing prices across the sample of localities to achieve the integral indicator for the overall country, which led to a drop in housing price levels in 2011 and incomparability with the data prior to 2011.
4 The Purchasing Power Parity exchange rate according to The International Monetary Fund data was RUB 24.6 per 1 international dollar in 2018.
5 The development institution for housing and mortgage sectors, set up by the RF government.
6 See the report of the IUE research “A Study on the Housing and Urban Planning Sectors Performance Indicators in Major Russian Metropolitan Areas.” It is available at http://urbaneconomics.ru/en/research/analytics/study-housing-and-urban-planning-sectors-performance-indicators-major-russian.
7 The Institute for Urban Economics (IUE) is a nongovernmental and nonprofit think tank established in Moscow in 1995. The IUE aims to provide analysis and assistance to cities and regions in social and economic development. It is ranked in the top 50 on the Global Go To Think Tank Index among independent think tanks in social policy and in Central and Eastern Europe.
Additional information
Notes on contributors
Nadezhda Kosareva
Nadezhda Kosareva has been the President of the Institute for Urban EconomicsFootnote7 since its foundation in 1995 and is an expert in the Basic Research Program at the National Research University Higher School of Economics. She holds a PhD in economics from Moscow State University M. V. Lomonosov, Faculty of Economics. She is a leading Russian expert in the fields of housing policy, housing and utility complex, and housing finance, including mortgage lending, the real estate market, and urban regulation and land use, as well as the organization of local government and socioeconomic development of cities.
Tatiana Polidi
Tatiana Polidi is the Executive Director and Head of the Real Estate Market Department at the Institute for Urban Economics (Moscow, Russia) and an expert in the Basic Research Program at the National Research University Higher School of Economics. She holds a PhD in economics from the National Research University Higher School of Economics (Moscow, Russia). She is a leading Russian expert in the fields of housing policy and housing finance, including mortgage lending, real estate market development, urban regulation and land use, and metropolitan area economy, as well as the organization of local government and socioeconomic development of cities.