Russia has largest volume of new housing contracts since Communist times in 2015

Russia has largest volume of new housing contracts since Communist times in 2015
Russian construction volumes are growing slowly, but year on year the rate of growth fell to reach a nadir in February.
By bne IntelliNews April 14, 2016

Last year saw the largest volume of new house commissions in Russia since 1987, but the share of private construction commissions fell by 38% in 2015, Vedomosti reports.

Over the last three years, an average of 1.6sqm was built per person. The most active regions are Tyumen (3.74 sqm), the Moscow region (3.27sqm) and Kaliningrad (3.05sqm), according to Rosstat. In general, the volume of housing construction in January-February 2016 decreased in 56 of Russia's 83 regions. Worst hit were the Ivanovo region (-9.6% y/y) and Buryatia (-14.9% y/y).

Prices of homes are flat on the primary market, but have picked up slightly on the secondary market, reports Vedomosti, as the number of residential real estate deals on the secondary market in Moscow in particular increased significantly, but not enough to push up prices.

However, the overall volume of construction growth year-on-year is falling due to the economic slow down, even if the total volume of housing is increasing slowly. Construction volume growth was negative every month last year, but seems to have reached its nadir in January when volumes shrank by 4.2% but started to grow again for the first time in February, expanding 0.4% and picking up some momentum in March with a 1% expansion y/y.

Construction is one of the three big economic drivers (consumption and investment are the other two) so the numbers are another economic indicator that suggests Russia's recession has now past bottom, or at least the economy has stabilised after a series of oil and currency shocks in the last 18 months.

Municipalities are taking the lead in building new homes, but by far the largest part of Russia's residential construction sector remains the private construction of dachas, or summer houses. Individual construction of these accounted for almost half of all housing built in Russia in the last three years.