Panels & Furniture Asia January/February 2021

MARKET REPORT
Pandemic gins up
Russian demand
for wooden houses
By Marina Sidorova
During a meeting on the development and
decriminalisation of the timber complex,
Russian President Vladimir Putin said that the
wooden construction of prefabricated houses
offered great development opportunities.
The Russian leader also demanded that any
obstacles interfering with the development of
this segment be obliterated.
“All legal barriers must be eliminated in order
to develop this field,” stressed the President.
“This is important to be able to resolve housing
problems of citizens that will have additional
opportunities to build their own houses as well
as to develop the building industry, to create
new jobs at wood processing enterprises.”
Photo: Pavel Neznanov / Unsplash
De-urbanisation became a new trend in
2020. The COVID-19 pandemic has egged
urban dwellers towards possibly resettling in
country houses. And more and more prefer
wooden houses.
In 2020, the Russian market for wooden
house construction continued growing. The
number of requests for the construction of
wooden houses in March to April 2020 grew
by 30% compared to the same period in
2019. The overall production, construction
and sale of timber houses grew by 10% to
15% within six months. In 2019, the wooden
house construction segment in the total house
building sector increased by 1.4 percentage
points to 22.4%, as the Rosstat (Russian
Statistics Agency) declares. This has been
the highest estimate since 2014. Experts
from the Wood Housing Association of the
Russian Federation claim that this growth is
driven mainly by deferred demand; because
of the pandemic, under restrictions and
self-isolation, most people who planned to
purchase real estate assets in the next few
years began to think, among other things, of
building a cottage as an alternative to buying
an apartment, giving preference to timber
houses.
“The present-day situation in the wooden
housing market shapes quite well,” said
Vadim Fidarov, Director for government
relations of the Wood Housing Association
of the Russian Federation, a member of the
Timber Processing Business Committee at
the Chamber of Commerce and Industry of
the Russian Federation. “Most enterprises
and building contractors are overloaded
for the next several months, while some of
them accept orders for the next year already.
It is hard to say yet if the number of orders
decreases in the autumn and winter of 2021.”
The unstable currency exchange rate has been
putting a crimp in the extraordinary demand of
low-height housing construction too.
MORTGAGE SERVICES: EXPENSIVE AND
INOPERATIVE
The unavailability of acceptable loan-based
financing for construction of wooden houses is
one of the barriers. The banks grant loans for
these purposes with considerable reluctance
because they think that a wooden house is a
high-risk investment. To boost the demand for
wooden houses, the Ministry of Industry and
Trade has set up a subsidisation programme
for purchasing prefabricated wooden houses,
reimbursing bank costs from the federal
budget resources. In April 2020, the Ministry of
Industry and Trade introduced amendments in
the regulations on subsidisation of mortgage
credits for the construction of wooden houses.
Restrictions on total revenues and other claims
on contractors and vendors were removed.
Before this, the manufacturer’s revenue had
to be at least 200 million rubles. The ministry
guaranteed a lump sum subsidy of 10% of
the house value, while before they assumed
to renew the concessional lending period
each year, but the state did not guarantee
the extension. Besides, the person does not
get money in their hand but instead the bank
delivers the loan amount to the contractor
(vendor).
The new version of the regulations allows for
funding the initial instalment of up to 350,000
rubles in loans for purchasing prefabricated
wooden houses that cost less than 3.5 million
rubles. Fidarov explained that 3.5 million
rubles is not a loan amount but the maximum
contractual cost of the house or prefabricated
house. The programme grants a subsidy of 10%
of this amount as the initial instalment.
22 Panels & Furniture Asia | January / February 2021