In Mr. Balakin’s opinion, an increase in the price for construction materials also played a part. He expects that real estate prices will continue to rise at least until the end of this year.

At the same time, Mr. Balakin hopes that real estate will become more affordable soon, after more than 30 mortgage bills are passed (they are expected to go through parliament before the summer). Meanwhile, analysts pay more attention to growing competition among banks operating on the mortgage market.

According to the Novye Izvestia newspaper, about 77 percent of Russian people want to improve their housing conditions, but only 1.2 percent have money to solve this problem immediately. Budget mechanisms to solve the housing problem, which cover certain groups of citizens (young people, the military etc.), are plagued by the lack of funds.

All over the world, mortgage is a market mechanism to solve the problem. In Russia, there has also been a lot of talk about it recently, but few people can afford it. According to the Association of Russian Banks, mortgage loans amounted to $56m in Russia in 2001. In 2002, it was $260m, and in 2003 – about $500m. This year, mortgage loans are expected to be about $1bn.