Mikhail KHAZIN, economist, analyst
The construction industry fall is a natural result of the decrease of the population’s living standards. Those who could buy flats bought them long ago. More than that, they are trying to sell them because taxes are growing, and rental rates decrease due to the living standards’ decline.
The forecasts are calculated on the basis of official data, and the latter expected the growth of the population’s expenditure. As a result, much has been built but cannot be sold as the market is overstocked. The mortgage has fallen sharply, by approximately 40%, and even the significant decrease of rates will not revive it. The population have changed the consumption mode of life for the mode of saving. And people do not buy realty within such a model.
Banks assess the situation as a growth of risks, and either do not lend money to developers or increase the rates. On the whole, I would say that the current condition of the construction sphere and the real estate market is the result of the impact of two factors; the actual fall of people’s profits and subjective overestimation of the economic conjuncture.
As no real growth is expected (which should not be confused with the governmental forecasts), the crisis in the construction industry will only become enhanced.