The reasons for building crisis

20.08.2008 00:00
Ministry of Regional Development and Building of Ukraine considers the main reasons for the sharp decline in the construction of a complex permitting system, lack of qualified personnel and outdated material and technical base. In addition, according to authorities, the situation has affected reduced profitability of real estate investments and falling housing demand. As reported LigaBusinessInform press service Minregionstroya, in January-July, construction work was 97.9%, a 2.1% decrease compared with the corresponding period last year. In particular, a 6% decreased the amount of work to prepare construction sites, at 1.8% - for the construction of buildings and structures, at 1.5% - for installation on buildings and facilities engineering equipment.

Minister of Regional Development and Building of Ukraine Vasyl Kuybida believes that the reason for such results are objective factors that affected the construction market in the regions of Ukraine. Among the major ones Minister called: a complex and opaque system of permitting the construction, lack of construction industry with qualified personnel, outdated material and technical base of construction companies, their low level of equipment of modern construction machines and mechanisms, as well as the slow introduction to the building production of new efficient technologies , modern building materials and products.

Do not depend on Minregionstroya, but also affecting the market factors the Minister called the decline in profitability of real estate investments and falling housing demand due to lower solvency of the population, rising interest rates on loans to investors and contractors, which led to a decrease in credit availability, especially for small and medium-sized enterprises. Under the influence of these factors there was a decrease in working capital construction companies, forcing them to suspend construction.

Estimated Minregionstroya, about 10% influence factor is a rise in price of construction materials due to rising cost of raw materials, fuels and lubricants. "The next factor in the construction market is somewhere in the 3-6% - is the lack of actual financing of capital investments from state and local budgets. And about 7% has the effect of such factors as the complexity of the process of land allocation for construction", - noted Minister.

In order to support mortgage lending this year, VA Kuybida proposed changes to the state budget for 2008. "The state should create conditions for the inflow of capital investment, which in turn will revive the construction market," - said the head of Minregionstroya.

Recall that in January-July 2008 in Ukraine reduced the amount of work in all major types of construction activities. Over half of domestic enterprises have performed construction work in the amount of 33.5 milliard., That on 2,1% less than in the corresponding period last year.
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