Regional overview: concessional housing construction becomes less affordable

April 22, 2016 18:22

The government significantly reduces its activity in one of the major social sectors - social housing construction. The lists of those who are eligible for social housing construction loans are reviewed in terms of cuts in all regions. This policy fits in the general ‘curbing social benefits’ trend.

Construction industry is facing a dual challenge. On the one hand, the pace of housing construction has been reducing in the past three years. For example, in 2012, housing construction plans have been cut by 10-15% compared with 2011 in almost all regions. The state is interested in resuming the construction volumes, as it is one of the most effective mechanisms to stimulate economic growth. On the other hand, the state cannot afford to continue funding the concessional housing construction. If the policy of mass-scale cheap construction loans is resumed, Belarusian ruble will collapse: Belarusian construction industry is rather a currency consumer than its generator.

In our view, the government is curbing its social policy in the construction industry. The lists of those eligible for social housing need to be reviewed before April 2nd, 2013. According to official sources, 40 thousand people have already been excluded from these lists all over the country.

The unavailability of concessional loans will increase social discomfort in the country. Moreover, the trend towards reduced construction pace will continue: it will be very difficult for ordinary people to engage in housing construction without state’s support. The lowest housing construction loan interest rate is 31% per year, which means monthly loan payments circa BYR 9 million. As a rule, the combined salaries of both spouses are not enough to afford this.

It is difficult for young people to buy own house in Minsk, as an alternative, they could consider regional centres, but there they face with the challenge to find a job in the specialty.