Economic nauki/13. Regional Economy

PhD in Economics Kiyatkina E.P.

Samara State University of Architecture and Civil Engineering, Russia

Formation of prospective mechanisms for attracting the residential construction investments

One of the main directions of the reforms, being carried out in residential sphere, is the elaboration of the mechanism for the housing programme implementation using both budget and off-budget financial resources. This mechanism is based on the optimization of structure of housing fund and residential construction. It is obvious that the necessary changes of unfavourable existing tendencies of residential sphere development are so great, that they exceed the adaptive abilities of the existing control system of urban functioning and development. There were a lot of different attempts to create and implement various forms of residential sphere investment, both on the federal and regional levels, during the exchange relations development in Russia. A fair quantity of methodological approaches was worked out in national and foreign scientific works to organize long-term crediting in the residential sphere. As a rule, the majority of methods require an amendment of existing regional (or federal) legislation or establishment of new business and non-business corporations.

Complex representation of existing mechanisms and tools of construction investment and home purchasing, their advantages and disadvantages can be represented in the following table, which includes the current and prospective mechanisms for attracting the residential construction investments taking into account advantages and disadvantages with reference to consumer groups of population depending on income level.

Table 1 – Analysis of current and prospective mechanisms for attracting the residential construction investments

Advantages	Disadvantages	Consumor groups income RUB /month per man
Housing bonded debt (HBD)
State guarantees. The price of a bond is fixed on basis of construction costs and indexed as on the valuation changes of construction. Focus on wide sections of the consumers and investors. Possibility of bond and mortgage programmes joint operation.	Inadequate legal and financial guarantees of the Russian Federation for today’s efficient functioning of the mentioned scheme. Low bond yield means low appeal for prospective investors and doesn’t ensure broad involvement of means in construction. Bond indexing doesn’t give view of the situation at the financial market.	Over 2000
It covers primary and secondary housing markets. Protection of bondholders’ interests from the impact of inflation. Weak dependence on budgeted investment. There are no age and place registration limits. There is no need in warrantors, income declaration, and insurance.	Absence of the reinvestment mechanism. Long-term kind of accumulation of money for the purchase of housing habitation. Complicate and labour intensive organizational mechanism. Budget limits.
Mortgage lending
Market mechanism of housing habitation crediting is realized. The possibility of transition to the classical form of mortgage credit lending, employment of credit and financial market. High qualification of credit operation performing. It is possible to register the housing habitation under the ownership of the loan-subscriber at once.	Terms of credit are out of reach for the majority of population Dependence on budgetary investment. Problematic character of application of recovery against mortgaged property. The organizational and methodological scheme is worked out poorly. Borrowers’ extra expenses (insurance, evaluators, realtors and notary services).	Over 3500
Shared construction
It attracts the population to invest in construction. Progress payments for the housing. The possibility of buying housing habitation at the primary market with better consumer qualities. There is a an organizational mechanism.	Housing is affordable for highly paid categories of people. High probability degree of delay in construction and rise in price for housing. Failure to comply the undertaken obligations by building companies. The mechanism of insurance against risks isn’t worked out enough. There is legal insecurity of investors.	Over 5500
Regional programme with the use of budgetary funds
State guarantees of housing for vulnerable social groups. Housing purchase without appearance of money obligations. The organizational mechanism is worked out in detail.	The restriction of suggested housing types. Orientation to unprovided-for layers of society. Strong dependence on fill rate of the local budget . Bureaucratized system of organizational mechanism realization.	Less 2000
Commercial apartment building
It is possible to buy a comfortable housing. Habitation since conclusion of agreement. Follow-up buying-out of the housing is possible.	It doesn’t stimulate the housing market, doesn’t involve other housing programmes and secondary housing market. Privatization is impossible.	More 4000

Fig. 1 - Stratification of construction investments mechanisms and home purchasing in terms of average income of the population

The following conclusions were made according to the results of the carried out analysis:

1. Neither of these mechanisms of construction investment and housing purchase can separately claim to solve the housing problem. Each of them has its obvious advantages and disadvantages. These mechanisms are orientated to different social groups and different conditions of their realizations. Thus, these mechanisms are not mutually exclusive but they supplement each other. The HBD mechanism is the most accessible for implementation, because it covers almost all payable groups of population.

2. For solving housing problem in regions it is necessary to consider all mechanisms of construction investment and housing purchase as a whole uniform system with their significance ranking for each specific territory. In addition, the regional particularities of socio-economic and national development must be considered. At the present time, there isn’t such system approach in regional housing policies and executive authorities don’t pay due regard to this question.

Creating specialized housing investment funds with state participation can be an efficient form of big capital formation. The conditions, that ensure inflow of these funds, can be high yield (exceeding or at least comparable with the deposit interest of trading banks) and first-rate payback guarantees (Ministry of Finance of the Russian Federation warranty, etc.). Another variant is the emission of specialized high-yielding government securities and further market of their large and small blocks with introduction of tax remissions on income. Such form of obtaining funds provides with direct links of money resources of population with investment in construction sector, excepting intermediary activity of banks which presupposes the contribution of fractions of revenue in form of bank margin.

However, working out and development of such mechanisms must be based on economic and mathematical planning and numerical experiments with the use of the worked out models.

Literature:

1. Assaul A.N., Batrak A.V. Corporate structure in regional investment and construction complex. Moscow, 2006. – 168 p.

2. Arsenova E.V., Kryukova O.G. Economics of organizations (enterprises): reference book in schemes. Moscow, Finances and statistics, 2009.