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Russian Real Estate Market 2007

RussiaIn one recent poll, we asked Russians whether housing where they live has become more or less available for average Russians over the past year. Most respondents (60%) say housing has become less available (more often in large and small cities and towns – 66% and 67%, respectively). On the other hand, 27% say nothing has changed (residents of rural areas – 39%), and just 5% believe housing has become more available.

A total of 32% say that in 2006, more housing was built in their area than before (59% in Moscow, 54% in megacities, 56% in other large cities). Another 15% say that the same amount of housing was built, and 11% say less new housing was built. As many as 28% say that there was no new housing construction at all (60% in rural areas 32% in small towns).

Russians were asked about the quality of newly-constructed housing compared with Soviet-built housing. The new housing is better according to 38% (31% in Moscow, 57% in large cities), and 18% (28% in Moscow, 15% in large cities) say it is worse. Another13% think the quality of housing is the same.

Respondents seem to agree about housing costs: 77% (86% in Moscow and other megacities, 85% in large cities, 59% in rural areas) agree that housing prices have increased significantly. Only 7% say real estate costs are up only slightly, and 2% (5% in rural areas) say prices haven't increased at all.

Those who said housing prices have increased were asked an open-ended question: why do you think housing costs have increased? The most frequent answer money was devaluation of money and inflation, resulting in higher costs for everything, including housing (16%). Some noted that building land, construction material, and manual labor are all getting more expensive (5%). Others stress that prices are on the rise everywhere in the country, not just in their area (4%), that prices are driven up mainly because of the economy in Moscow and other large cities where money seems to be concentrated. Another 4% blame the government for not controlling housing prices, and some even say the government has deliberately increased prices. As many as 5% blame it on people who invest in real estate, buy buying and reselling apartments and houses. But some people consider this behavior justifiable, and say it is an effort to prevent assets from being impacted by inflation (3%). Other answers include: homes are bought up by the rich (3%), or the respondent's town is enjoying a strong economy due to proximity to a large city, the sea, the a state border, tourism, etc. Respondents named the following as reasons for increased housing costs: lack of order, rampant theft and bribery (2%), construction companies boost prices (2%), and mortgages (2%). A handful (2%) believe real estate prices are up due to better quality.

Higher demand for housing among immigrants is another common explanation given by respondents: 46% (71% in Moscow) say that immigrants buying many homes in their area, while 26% (34% in rural areas) say they have not observed this phenomenon often. Only 5% (14% in rural areas) say immigrants are not buying homes in their area.

Those who believe that immigrants are buying many homes in Russia these days were asked whether most of the housing in their area is bought by immigrants. A total of 32% said yes (50% in Moscow), but 7% say that most housing is purchased by locals.

Respondents were reminded that homes today are often bought for resale or renting. They were asked whether they approve or disapprove of this practice: 70% say they don't disapprove, but 18% do (27% of those who are 55 and older).

Despite the fact that respondents believe this practice is relatively widespread, Russians still purchase residences mostly for their own living space. Fifty-three percent (77% in rural areas) believe that most housing in their area is bought for residential purposes, while 22% (49% in Moscow, 41% in other megacities) see it as a way to invest money.

Those who disapprove of investing in real estate were asked to explain their point of view. Answers included: speculation, profiteering, con artists (6%), a housing deficit («people have nowhere to live but apartments are bought and then stay empty» – 6%), money laundering, criminal intent (3%) and the resulting increase in real estate costs (3%).

Population Poll. Nation-wide home interviews conducted March 3-4 2007 in 100 residencies in 44 regions. A sample size of 1500 respondents. The margin of error does not exceed 3,6%.
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Posted on Thursday, December 04 @ 17:14:06 MST
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