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. Last Updated: 07/27/2016

Affordable Housing Construction Drops

The government will build at least 54 million square meters of living space this year as part of a state-run affordable housing program, a drop-off of 10 million square meters from last year.

"This is somewhat lower than last year, but the task before us this year will still take an immense amount of effort to achieve," said Regional Development Minister Viktor Basargin on Thursday at a conference on low-rise construction, Itar-Tass reported.

"Construction is the locomotive of positive economic growth," he said.

Speaking at the meeting, President Dmitry Medvedev urged regional governments to do whatever they can to make land cheaper and increase construction for affordable housing.

"The regions need to send a direct message: lower the price on land," Medvedev said. "Land, of course, is our greatest treasure, but in a time of crisis, people should obtain it at a reasonable price."

Georgy Poltavchenko, the president's envoy to the Central Federal District, said his district aimed to boost construction by building more low-rise apartment blocks and individual homes because the structures require fewer capital expenditures and can be built by smaller construction firms without credit from Western banks.

"Three or four years ago, when we began the national housing project, we started out with much less than we have now but were nevertheless able to double the amount of construction," Medvedev said, adding that maintaining the rate of construction was a "sufficiently modest goal."

In 2008, 64 million square meters of living space were built, or 3 percent less than the 66 million square meters built in 2007.

The affordable-housing program is one of the government's four priority national projects — along with education, public health and agriculture — that have received high-profile attention and large amounts of federal funding since their adoption in 2006.

Last year, the government put 265 billion rubles ($7.4 million) toward the four projects, with 90 billion rubles going to fund affordable housing, according to the government's national project web site.

Exact funding figures will be known after the Finance Ministry's revised state budget is approved later this month.

Also on Thursday, Basargin said the government is in the process of deciding whether to increase the Agency for Mortgage Lending's capital by 40 billion rubles ($1 billion) to help keep interest rates on mortgages between 12 percent and 15 percent.

Arkady Dvorkovich, top presidential economic aide and head of the agency's supervisory board, said Wednesday that the government plans to help either banks or the agency to get credited at lower rates, about 8 percent for example, Vedomosti reported. This would allow the lenders to set mortgage interest rates at 13 percent or 14 percent, down from their current levels of about 20 percent.