Housing privatization in Moscow : who privatizes and why

Among municipalities, Moscow"s free of charge program, which was combined with an efficient system for processing applications, got off to a quick start and performed well during 1992. According to the State Statistical Office, 366,000 units, or approximately 13% of the 1990 state housing stock, were privatized in Moscow by the end of the year. In short, the housing privatization program appears to be well on its way to achieving its primary objectives to transfer sufficient units to private ownership so as to form the basis of a private market, and to give a substantial number of families a genuine stake in Russia"s economic reforms. However, many questions remain unanswered. The following questions are addressed by this paper. (1) Which households have availed themselves of the opportunity -- those with higher incomes and white collar jobs, or all classes? (2) How do pensioners behave? (3) What motivates some families to privatize and others not to do so? (4) To what extent did privatization increase throughout the year and when did households privatize? (5) How many more units are likely to be privatized and what will influence these decisions? Based on analysis of data from a USAID-sponsored survey of 2,000 households in Moscow conducted in 12/92 by the Russian Academy of Sciences Institute for Economic Forecasting, the paper concludes that economic incentives appear to be the driving force behind housing privatization. Results reveal the following. (1) The higher the value of the unit the more likely the tenants are to privatize. (2) Pensioners privatize at a higher rate and earlier than other socioeconomic groups. (3) Those in higher level or favored occupations, directors and intelligentsia, who are likely to have obtained better housing, have a higher rate of privatization. (4) Worries about increased maintenance fees are negative factors in the privatization decision and significantly lower the odds of privatization. (5) The desire to will a flat to an heir is a positive factor. (6) While pensioners privatize to will their flat to heirs, others privatize to acquire a valuable asset with the potential of providing rental income and/or to protect themselves from the uncertainty of the future of state rentals. (Author abstract)