HOUSING PROBLEM IN RUSSIA AND CEE COUNTRIES: COMPARISON OF ECONOMIC AND FINANCIAL ASPECTS Liudmila Guzikova 2015

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

Tasks of the study 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.

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

Three standpoints - three stages of housing problem perception 1. sanitary-epidemiological and ecological. Initial form of the housing problem was largely associated with public health. 2. housing as the social right. New form of the housing problem supposed the minimal housing standard that should be provided for all residents. 3. housing as an economic category and the subject of the wide range of economic relations.

Housing is specific part of national wealth and unique economic good which combines a wide and diverse set of properties and ways of use housing has long service life that leads to high costs for its maintenance and repair long construction and service cycle of housing does not allow building up the housing fund in a short time and results in the delayed response of supply to meet the increased demand and the risk of short-term price growth housing - is an expensive commodity. Its purchase usually involves savings and credit methods of financing, so the level of interest rates has a significant impact on housing demand housing is the subject of long-term investments individual nature of housing consumption generates wide social consequences, so underconsumption becomes the social problem and requires the governmental intervention

Role of government Due to large social importance of housing it is assumed that the government and local authorities should make efforts for housing problem solving. Housing policy is a form of state intervention to construction, distribution and use of housing, regulation of housing that affect the location, type, availability and affordability of housing regardless to the form of its ownership.

Areas of state intervention widely used in developed countries (Glennerster, 1992) regulation of housing construction, service and operation standards control of rent in the private sector and ensuring the stay terms for certain categories of residents construction, management and service of the public housing subsidizing the costs of tenants in both public and private sector and housing associations subsidizing the costs of the housing improvement for private and public owners housing subsidizing through the tax system

Model of housing financing by local authorities and municipalities

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

Background of the housing problem in CEE countries and Russia 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

Housing problem: West vs East 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

Data sources Eurostat ec.europa.eu/eurostat Russian Federation Federal State Statistic Service

Population of CEE countries EU members

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

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

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

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

Housing cost overburden rate in CEE countries EU members, %

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

People at risk of poverty or social exclusion, %

Conclusions (I) 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 (II) 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.

Thank you for attention!