Russia: Dramatic Shift to Demand-Side Assistance
One of the most important results of the economic reforms in the housing sector initiated by the law “On Privatization of Housing in the RSFSR” in July 1991 is a fundamental change in the role played by the federal government in the functioning and development of the housing sector. Critically, the government stopped operating as the principal centralized source of housing construction finance. Simultaneously, an attempt was made to improve targeting of government investments in the housing sector, which, despite acute budget deficits, the state continued to provide for the social policy goals. The intensive restructuring of the housing finance system driven by the critical condition of the state budget was truly unprecedented. Before the economic reform started in 1991, the budget was responsible for almost 80 percent of the total volume of new housing. By mid-1999 the share of developers in state ownership was down to 11.3 percent, with only 8.6 percent of the housing built by developers in federal ownership.