Social housing funds important for Azerbaijan
By Aynur Karimova
To own a house is most likely the dream of every family. For a young family, buying an apartment or a house is especially important.
However, despite the construction boom which Azerbaijan underwent in recent years, not all young families have been able to fulfill their home ownership dream.
Experts say the cost of housing in Baku exceeds the purchasing power of the population. And though mortgages help solve this problem partially, the current maximum amount of mortgage financing - both conventional and social does not exceed 50,000 manats, which in some cases is not enough.
In this case, the creation of social housing fund is of significant importance.
Vugar Bayramov, the chairman of the center for economic and social development, believes that the creation of a social housing fund is important both to control prices in the property market and to provide low-income families with a much needed service.
He told local media that the creation of a social housing fund in Azerbaijan would solve the problems which exist in this field, in 10 years.
"Azerbaijan has sufficient funds for this. The creation of these funds is also envisaged in the Housing Code of the country. This document defines the basis and rules for determination of low-income families in need of housing," he said. "The Housing Code states that housing fund of social purpose is the collection of living area of state and the municipal housing stock, leased on the basis of social lease contracts."
The demand for housing in Azerbaijan increases year by year. Statistics also indicate a high demand for housing in the country. In 2013, Azerbaijan’s per capita housing stock stood at 17.8 square meters, which is almost twice lower than in Western Europe.
According to the State Statistics Committee, some 2.4 million square meters of housing were built in Azerbaijan in 2013, while 86,852 marriages were officially registered in that year. In other words, only 27.66 square meters of housing were constructed for each new family. This fact brings the issue of social housing fund to the agenda.
Social housing funds, which allow citizens to buy housing under simplified conditions, exist not only in developed countries, but also in Turkey and CIS countries, including Russia.
The construction of social housing is expedient in several aspects.
"Oil revenues spent to the construction of social housing will be back after 20 years, which will allow future generations to use oil revenues. Secondly, it will prevent a price hike in the property market. Finally, it will relieve low-income families from rent payments and stabilize prices in the rental housing market," Bayramov said.
However there are several obstacles hindering the creation of a social housing fund in Azerbaijan.
"The creation of a social housing fund in Baku and the regions is a topic of discussion, but the final decision on this matter is still pending. Despite a high demand for housing in Baku, it is important to create such funds in the regions of the country as well," Bayramov noted.
Another obstacle is related to the problem of allocation of territories for the construction of social housing.
"Limited territory of municipal lands and generally illegal construction in the outskirts of Baku negatively affect the creation of a social housing fund in Azerbaijan. It is still uncertain what categories of population will be offered social housing," he said.
Bayramov also stressed on the importance of allocating funds for the construction of social housing not only from the state budget, but also from other sources.
"According to preliminary estimates, each year some 300 million manats can be allocated from the state budget for this purpose. However to ensure the sustainability of this process, it is necessary to find other sources of financing. And finally, the institutional management structure of the fund hasn't been determined yet. In several countries, such funds operate as joint stock companies, which allow them to attract funds from the securities market," Bayramov noted.
--
Aynur Karimova is AzerNews’ staff journalist, follow her on
Twitter: @Aynur_Karimova
Follow us on Twitter @AzerNewsAz