The economy cannot be fooled! Low mortgage price is real only with a high standard of living

The economy cannot be fooled! Low mortgage price is real only with a high standard of living

30 July , 10:32
Trying to artificially “lower the cost of the mortgage” is like knocking on the thermometer, “knocking down” the temperature, instead of taking treatment.

Putin recently announced that Russia has a unique opportunity to finally solve the "housing problem". In fact, this is not the case; the country has not got any opportunity and will not appear in the near future. Economist Dmitry Prokofiyev writes about this in his channel, clearly explaining that without the growth of the welfare of Russians, there will be no quality housing in the country:

“The housing issue really turned out to be the most difficult issue of Russia's economic development in the 20th century. The Soviet government never coped with it. Comrade Lenin promised to provide the workers with apartments by 1938. A year after the scheduled date, Comrade Stalin explained that pests had prevented the solution of the housing issue, therefore citizens should expect separate housing by 1959. In 1961, apartments were promised after the building of communism, that is, in 1980.

In 1985, communism was no longer promised - in contrast to the apartments, the distribution period of which was moved to 2000. Now instead of communism there is a mortgage loan. But comfortable housing is still in question.

Why did it happen? This is a long history, the housing issue in the Russian Federation has become a derivative of the practice of building socialism in a single country.

Before the revolution, Russia did not have a sufficient number of cities in the modern sense of the word. There were capitals - Moscow and Petersburg, designed by the Dutch and built first by the Italians, and then by the French, Germans and their Russian students. There was Odessa, a port organized by the French. There were European cities - "big" Kiev and Warsaw, "small" - Riga and Revel. And in the rest of Russia there were workers' settlements near factories, trade fairs with warehouses, military fortresses, settlements at railway stations and crossings... but not cities as a place of free residence for free professionals - artisans, merchants and scholars. There was such a city in Russia, it was called Novgorod, but the formidable Tsar of the Muscovites Ivan ruined it, and slaughtered the inhabitants.

Comrade Stalin ordered to build what we in Russia call "cities". Stalinist urbanism was like this - here is a residential area, here is a production area, between them is a path along which columns must be driven - in the morning from the residential area to the production area, in the evening - from the production area to the residential area.

In the vicinity of the residential area, it is necessary to build a small town for security, closer to the production area - the camp administration. Near the guard town, you can build a "house of culture" - to find employment for the wives of the middle command staff. On the outskirts - mansions for the bosses - so that the workers would not see, and the guards would not envy. The new district is a new residential area with only one access to the same road leading to the production area.

Since the construction of housing went under the category of "costs of socialist production", it was built so that it was impossible to "live" in it - in the sense in which we understand this word now. There you could sleep and eat. And there was no need for another - work from dark to dark with only one day off, and by Sunday there will be enough strength to lie in bed before the start of the next shock week. Of course, there were exceptions to this rule - but on the whole, a person in the Stalinist city was viewed as a production unit, an appendix to the "car for work" and "car for housing." Those who did not like this attitude could stay on the collective farm or get a bed in the polar barracks.

Two capitals stood out from this practice of urban planning - Moscow and Leningrad. But this had its own specifics - firstly, there was housing built on the basis of completely different principles, and secondly, the policy demanded a higher quality of life in the capitals.

And when Comrade Stalin ended, it turned out that nothing could be done with his town planning - the entire organizational and production infrastructure would have to be demolished. Therefore, in our cities there are no streets that can be crossed without stress - there are fields along which highways for transport (former highways) are laid, in the neighborhood of these highways there are "factories for housing" - multi-storey complexes. But it will not work in another way - it is impossible to live in Russia except in big cities by modern standards. And in our conditions, it is possible to ensure an acceptable cost of housing in big cities only in anthill houses.

There is, after all, another feature of the current Russian housing policy. The bosses constantly say - it is necessary to provide the possibility of a cheap mortgage so that “people can buy an apartment”!

Who will ever explain to them that the “cheapness of mortgages”, all these “two percent, as in Europe” is the inverse derivative of the high incomes of people!

Mortgages are cheap where the income of potential home buyers is high!

How it works? Just.

A high level of income gives a person freedom in choosing a home - he can simply rent it. A developer planning to sell apartments (and the bank that lends him) takes into account that no onerous terms of a mortgage with a "wealthy" person is rolled - by contacting the purchase of a home, he should have an obvious benefit compared to what he is renting. Either in the price of the transaction, or in the quality of housing. Housing liquidity, quality, infrastructure - the motivation of the developer to provide all these things grows with the growth of people's incomes, and not with a decrease in mortgage interest. In addition, income growth is an increase in competition among developers, and such competition works to reduce prices.

In addition, high incomes for home buyers mean low risks of non-payment, which means a decrease in mortgage interest. Plus guarantees of human rights and social guarantees - if the bank knows that having lost his job, a person will be able to continue payments, and not slide to the bottom - he will not raise interest.

And an affordable and high-quality healthcare system works to reduce the percentage of mortgages! If a developer and builder know that a sick person will not “collect text messages for treatment”, but will receive normal help, they will not raise the mortgage interest either.

This is not to mention the cost of human life - where disability at work or as a result of an accident due to the fault of a corporation makes a person a millionaire - there will be a cheap mortgage - there will be no need to put these risks into it. And the increase in life expectancy is a minus to the percentage of mortgages (it is necessary to explain why, or is it already clear?)

The boss can knock his pen on the table as much as he wants, demanding that the cost of the mortgage be reduced - as long as people have no money and their rights are not protected - the mortgage will remain expensive, and even a forced rate cut will result in an increase in the price of housing, just in a different form.

For example, the vast majority of Russian apartments that are being built and sold now are studios and "odnushki". That's right - they can be crammed into the complex more and their cost can be paid off faster. This is a classic housing "for the poor", who can only sleep there, and the rest of the time they have to spend somewhere at work.

And all this housing in settlements, outside the city outskirts is also, in fact, expensive, only this “expensive” “is expressed in an additional two or three hours“ on the way to work”, the need to have a car, and so on.

Well, you won't fool the economy!

The price of a mortgage (as well as any other compulsory expenses) is the inverse derivative of income and living standards. Not the other way around. The higher the income, the lower the price of the mortgage, the lower its share in expenses. And trying to artificially "lower the cost of a mortgage" is the same as if instead of being treated, knocking on the thermometer to "knock down" the temperature..."


Journalist Pavel Pryanikov comments on this material:

“I often write with optimism that the decrease in the key rate of the Central Bank will pull down mortgage rates, and at the same time save the construction industry. And there is. Cheap mortgages keep developers afloat, without it, with loan rates of 10-12%, as before, we would see a collapse of the industry by 20-25 percent.

And only in one Moscow agglomeration in housing construction and related areas employs 1 million people. This would entail hundreds of thousands of new unemployed, reduction of local budgets by tens, if not hundreds of billions of dollars (sales of new buildings in the Moscow metropolitan area are 1-1.5 trillion rubles per year).

But without the income growth, cheap mortgages can only produce human beings in an open field. The average area of a new apartment in Russia has already dropped by 10-12 square meters over the past 10 years. m. And the average number of storeys in the new building has grown by 2-3 floors. Quasi-housing has appeared on the market in general - for example, this year in Moscow apartments of 10 sq. m.

The growing mortgage with stagnation and, moreover, falling real incomes has another problem: more and more money is being withdrawn from the household budget, and they have to cut other spending (“if it has arrived in one vessel, then it has lost in another”). In such a situation, mortgages suppress household spending on tourism, health, education, etc.

In my other channel, I have already cited a poll about what kind of housing Russians dream about. 66% of them dream about their own house, and as an ideal they see 30-35 sq. m per person (housing of 90-100 sq. m. for a standard family of 3 people). This is analogous to American and Canadian settlement.

But with median salaries in the country at the level of $ 450-500, dreams of owning a home will remain dreams. The market can only offer them a human being at the rate of 15-20 sq. m per person (in Moscow, on average, one person accounts for 19 sq. m. of housing). Perhaps with a mortgage of 2% it will be 22-23 sq. m, but even with such a fantastic option, this will not improve the quality of the urban environment in Russia and will not bring Russians closer to their dream..."

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