Blog Post
Belfer Center Director Graham Allison and Strengthening Democratic Institutions Assistant Director Stefan Zhurek traveled to Moscow in April to present an innovative mortgage plan to Moscow''s Mayor, Yuri Luzhkov. This meeting marks the first major milestone in SDI''s Moscow Mortgage Initiative, which was established when Luzhkov asked for SDI''s assistance in creating a mortgage financing system to allow middle class Muscovites to purchase their own dwellings.
Is this the Russian analogue to the "American dream"? Perhaps. Currently in Moscow, most citizens must make full payment for housing in one lump sum, which most are unable to afford in a city where the median cost of a small apartment is around $50,000. This represents 22 years of total average reported income for a typical Russian citizen.
As a result, Moscow is a city of paradoxes. A substantial percentage of the population lives in substandard apartments because of a chronic housing shortage. At the same time, apartments in new residential districts stand vacant for lack of buyers.
A functioning mortgage market in Moscow would help resolve this paradox, by enabling would-be homeowners to purchase new apartments in affordable installments.
During the presentation, Allison outlined measures necessary for Moscow to establish a working mortgage system by the end of this year beginning with the essential legal foundation, namely, enforceable mortgage contracts.
Under Allison''s direction, a working group of Kennedy School, Russian, and international experts developed the plan. Additional members of the group from the Center include Zhurek, SDI Associate Director Fiona Hill, SDI Fellow Cameron Half, and SDI/ISP.