Penza, 26 October 2015. PenzaNews. The Penza region needs to take measures to avoid a decrease in new housing supply, proposed Alexander Grishaev, acting regional Minister of Construction and Communal Services, during the regional government meeting session held on Monday, October 26.

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“Even though we expect a 3% growth in new housing supply over 10 months, which means the trend remains positive, there are still several factors in the situation,” he pointed out.

According to the head of Construction Ministry, one of the most influential factors is a 40% drop in quantity and volume of new mortgages, which negatively affects the demand for new housing.

“Consumer purchasing power experienced a sharp drop. At the moment, real estate developers have some 2,000 flats that have not been purchased yet – in apartment buildings already in operation or ready to be put into operation by the end of this year,” Alexander Grishaev clarified.

He added that the trend also declined due to recent amendments to the federal law on co-funded construction, and new requirements of the Central Bank of Russia that increased the minimum threshold of core capital for insurance companies from 4 million rubles to 1 billion rubles.

“This means the requirements for real estate developers are gradually getting higher. This could be a good change,” said the acting minister, adding that registration of new housing and work under present agreements are currently halted until the full establishment of relations with new insurance companies.

“Based on data from the Central Bank of Russia, only 16 were allowed to operate throughout the country, and only 4 in the Penza region. And about the requests submitted by real estate developers – there is no guarantee new agreements will get signed after all,” Alexander Grishaev stressed.

In his opinion, the present situation requires joint action from all authority bodies and deputies on all levels to stabilize the real estate market.

“The Ministry [of Construction and Communal Services in the Penza region] proposed a set of measures to the government, to the Finance Ministry – to introduce a set of amendments for 2016 to the housing development incentive program, with introduction of measures to refund interest expenses for loans, taken for construction of apartment buildings under the program ‘Housing for Russian Family,’ to legal entities from the regional budget,” he explained, pointing out that similar laws were developed and passed in several parts of Russia.

Moreover, Alexander Grishaev suggested to develop measures to provide interest rate compensations to individuals who take part in the program “Housing for Russian Family” together with the Ministry of Labor.

“Although we may take another look and expand our [regional] program to provide housing to newlywed families,” added the acting minister.

The head of the Construction Ministry expressed his belief that the aforementioned measures will allow to provide accurate support to real estate developers in the region, create incentives to participate in the program “Housing for Russian Family,” and create steady public demand for housing sold through the program.

Discussing the activities of regional municipalities, he expressed his opinion that Penza and Zarechny must increase their efforts in this field, as, according to the acting minister, they “might have problems appearing” in it.

“It is difficult to talk real estate developers in Penza city to provide loan housing,” Alexander Grishaev said. According to him, many of them struggle to understand how to manage the previously loaned housing and compensate sustained additional expenses.

He also stressed the importance of doing everything necessary to prevent any new hoodwinked co-funded housing investors appearing in the Penza region, as the current trend steadily points towards such a possibility.