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June 3 – June 9, 2013

Housing construction and commissioning

The situation has not changed
Housing construction and commissioning

The state is trying to change the housing market rules. State support for the housing construction is shrinking. Simultaneously, a draft law on transition of non-privatized housing into rental housing is being elaborated.

In May Lukashenko signed several decrees regulating the real estate market.

1. State order for the housing construction is introduced for individuals, entitled to state support. State order implies that people will be excluded from the investment in construction. Housing construction will be carried out by public order. In other words, construction companies will receive funding directly from the state on favorable terms. Interest rate on such soft loans within the state order will be circa 2% per annum.

2. State support for housing will be a one-off deal. Soft loans will be allocated for the housing construction outside the capital.

3. The ban on sale of residential property built with soft loans is increased from one to five years (after the loan is paid off completely).

4. Residential property build with the soft loans cannot be leased off until the loan is paid off entirely. This novelty might have a negative impact on rental property market in Minsk (prices might spring up).

Other trends in the real estate market include as follows. During the past month, there was a threefold increase in the registered privatization applications concerning residential property in Minsk. The excitement was triggered by publications in the Belarusian media about the upcoming changes in the legislation regarding transfer of non-privatized housing into rental. According to the Housing Policy Department of the Minsk City Executive Committee, 87% of housing in Minsk is privately owned, 13% make non-privatized apartments. As for the rental housing construction, so far it is only a pilot project. Regional authorities are testing the new scheme and put public housing for rent at below-market prices. At the moment it had no impact on the real estate market.

Another trend is that since 2012 Belarus’ construction industry experiences a serious shortage of skilled workers. Minsk Oblast Executive Committee Chairman Boris Batura said that the problems in the construction sector – delays with commissioning and poor quality housing – come from staff shortages. Simultaneously, the average salary in the construction industry in the Minsk region is circa BYR 6 million (the highest in the country). This average wage is the maximum the construction companies can pay. Thus, the outflow of professionals will continue. This implies downward adjustment of the housing construction plans in the future. The government is solving the problems with the residential housing shortage and with the growing number of needy for better housing conditions, by reducing the list of entitled to benefits.

Noteworthy, in 2013 the housing construction industry in the regions revitalized. There is a slight increase in the rate of housing construction over the botched 2011 and 2012.

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Once a week, in coordination with a group of prominent Belarusian analysts, we provide analytical commentaries on the most topical and relevant issues, including the behind-the-scenes processes occurring in Belarus. These commentaries are available in Belarusian, Russian, and English.
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