Influence of the current crisis on the construction industry in Russia

Construction industry is one of the most important constituent parts of GDP of the country, and condition of this industry reflects in many respects the current situation on the Russian market. In recent years this type of economic activity is characterized by a slow recession which strengthened in the first quarter of 2016.

Thus, during this period the heads of the construction complex enterprises marked a significant worsening of the business climate. Index of the entrepreneurial confidence in the construction industry – parameter reflecting the arithmetic average of "balances" of orders portfolio and expected change of the number of the employed – decreased compared to the last quarters of 2015 by 3 % to -15,5% and gets closer gradually to the minimum parameters of 2009 at the level of -21%.

Moreover, it should be marked that for more than 2 years volume of the performed works in the construction industry decreases compared to the same period of the previous year. Such a long negative dynamics was not marked in any other basic industry even taking into account the stagnatory economy development.

The only driver of the construction complex in recent two years was residential construction: the rate of commissioned residential buildings in 2014 amounted to about 17%, in 2015 – 4%. Thus, last year the record volume of residential buildings was commissioned – 84,1 mln sq. meters.

However, since June 2015 in Russia this parameter began to decrease compared to the same period of the previous year. According to the branch experts, the continued decrease of the residents' welfare especially influences this trend: level of actual disposable incomes have been decreasing monthly in Russia for 1,5 years already. As a result, consumer behavior model changes: population puts off big-budget purchases.

And if in case of industrial production for the situation stabilization there is a possibility to use the external demand or work in stock (with an aim to sell the products later in the situation of more favorable economic conjuncture), then due to the specifics of the construction industry these measures are almost inapplicable. In the crisis conditions construction companies have to optimize their expenditures due to the decrease of the employees and compensations cutting. In addition, new buildings construction is limited, the projects in progress are held, and the priority in construction is given to the economy-class residential buildings.

According to the branch experts, worsening of the situation on the Russian residential property market could be more significant if only the program on mortgage interest rate subsidization on new homes market adopted in March 2015. During the year of its operation subsidies for more than 4,1 billion rubles were granted, 2,1 billion rubles of them - in 2015. The amount of the granted credits at the same time amounted to 484,7 billion rubles. In February 2016 the government agreed on the program prolongation till the end of the year, it is planned to allocate 20 billion rubles for its implementation.

And although representatives of the Ministry of Housing and Building and housing and utilities infrastructure of RF still consider mortgage with state support to be the main mechanism of the industry stimulation, this program, in its essence, inspires the transfer of the deferred demand for the residential constructions and is only a transitional measure. Experts believe that by the end of 2016 construction industry will not meet the situation worsening. Economic rebound should be expected not earlier than in 2017-2018, when, according to the analysts, the growth of actual disposable incomes of the population will be marked.