HOUSING PROBLEM IN RUSSIA AND CEE COUNTRIES : COMPARISON OF ECONOMIC AND FINANCIAL ASPECTS

1. HOUSING PROBLEM IN RUSSIA AND CEECOUNTRIES: COMPARISON OF ECONOMIC AND FINANCIAL ASPECTS Liudmila Guzikova 2015

2. to determine the features and the trends in the housing situation in CEE countries and in Russia from the standpoints of economy and finance Aim of the study

3. to identify the theoretical framework concerned to economic and financial aspects of the housing problem in CEE and Russia • to analyze the current state and dynamic trends of economic and financial characteristics of the housing sphere in CEE countries and Russia. Tasks of the study

4. presence of the homelessness • housing disparity to minimal quality standards • overcrowding • forced living in the cost overburden housing Criteria indicating housing problem in contemporary society

5. sanitary-epidemiologicalandecological.Initialformofthehousingproblemwaslargelyassociatedwithpublichealth.sanitary-epidemiologicalandecological.Initialformofthehousingproblemwaslargelyassociatedwithpublichealth. • housing as the social right. New form of the housing problem supposed the minimal housing standard that should be provided for all residents. • housingasaneconomiccategory and the subject of the wide range of economic relations. Three standpoints - three stages of housing problem perception

6. housinghaslongservicelifethatleadstohighcostsforitsmaintenanceandrepairhousinghaslongservicelifethatleadstohighcostsforitsmaintenanceandrepair • longconstructionandservicecycleofhousingdoesnotallowbuilding up the housing fund in a short time and resultsinthedelayedresponseofsupplytomeettheincreaseddemandandtheriskofshort-termpricegrowth • housing - isanexpensivecommodity. Itspurchaseusuallyinvolvessavingsandcreditmethodsoffinancing, sothelevelofinterestrateshas a significantimpactonhousingdemand • housingisthesubjectoflong-terminvestments • individual nature of housing consumption generates wide social consequences, so underconsumption becomes the social problem and requires the governmental intervention Housing is specific part of national wealth and unique economic good which combines a wide and diverse set of properties and ways of use

7. Duetolargesocialimportanceofhousingitisassumedthatthegovernment and local authoritiesshouldmakeeffortsforhousingproblemsolving. • Housingpolicyis a formofstateinterventiontoconstruction, distributionanduseofhousing, regulationofhousingthataffectthelocation, type,availabilityandaffordabilityofhousingregardlesstotheformofitsownership. Role of government

8. regulationofhousingconstruction, service and operationstandards • controlofrentintheprivatesectorandensuringthestaytermsforcertaincategoriesofresidents • construction, managementandserviceofthepublichousing • subsidizingthecostsoftenantsinbothpublicandprivatesectorandhousingassociations • subsidizingthecostsofthehousingimprovementforprivateandpublicowners • housingsubsidizingthroughthetaxsystem Areasofstateinterventionwidelyusedindevelopedcountries (Glennerster, 1992)

9. Model of housing financing by local authorities and municipalities

10. 1) proportion between need and demand 2) proportion between demand and housing quantity Two indices of governmental intervency to the housing problem that should be used to determine the long-term strategy for the housing sector development.

11. belonging to the former socialist camp • being the result of the larger states collapse (except Bulgaria, Hungary, Poland and Romania) • long stay outside the field of market economy, the change of the state system and the crisis in the economy and social sphere • put imprint on the current state of the housing sector and the housing problem in all CEE countries Background of the housing problem in CEE countries and Russia

12. Western Europe: housing problem appears primarily as the problem of legislation and regulation CEE counties and Russia: housing problem appears to a large extent and as engineering and construction Housing problem:West vs East

13. Eurostat ec.europa.eu/eurostat • Russian Federation Federal State Statistic Service www.gks.ru Data sources

14. Population of CEE countries EU members

15. Structure of households in CEE countries EU members in 2013, %

16. The volume of housing fund in CEE countries EU members in 2013

17. Index of civil engineering work in CEE countries EU members in 2007 – 2014, %

18. The material quality of the housing fund in CEE countries EU members in 2013, %

19. Housing cost overburden rate in CEE countries EU members, %

20. Price indices of the housing market in CEE countries EU members, % (basic year – 2010, 100%)

21. People at risk of poverty or social exclusion, %

22. Full and final solution of the housing problem in all its manifestations, by our opinion, can't be implemented due to the constant desire of people to a more comfortable housing, a higher level of service and a healthy beautiful environment and opportunities to meet this desire continuously providing by scientific and technical progress. • Genesis of the housing problem in Russia and CEE countries determines its current manifestations and predetermines the similar ways of its solving. The leading role in this process should belong to the state authorities. The certain tasks are to be solving in the central and local levels and should be directed a) to construction, reconstruction, repair and service of the housing fund to provide the ability of adequate dwellings, b) creating and supporting the financial affordability of housing using the range of direct and indirect financial means. • Two demographic trends can impact significantly the housing problem in CEE countries: depopulation and atomization of households. In Russia the first trend was overcame in recent years bur the second still acts. Conclusions (I)

23. he quality of the housing fund both in Russia and CE countries needs to be improved. Housing fund in CEE and Russia has a low level of utilities, so the task of modernization and equipment of the existing fund is not less important for the housing problem solving than the construction of new housing. In most CEE countries and in Russia a high proportion of housing fund is owned by population. This fact combined with the low level of housing utilities leads to the conclusion that large-scale works on housing modernization need to be supported by government. • The rate of housing cost overburden in the region under consideration is significantly higher than EU average and in the most countries the situation tends to get worse due to a) high level of housing deprivation; b) the housing price growth, c) high level of the people at risk of poverty. • The way of the housing problem solving in Russia and CEE countries is in the field of general economy. Until the income of the most part of population have not grown significantly the concept of the preference of private ownership for the most part of housing fund should be revised in favor of social housing with guaranteed living standards and terms. Conclusions (II)

24. Thank you for attention!