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    ANALYSIS OF THE CURRENT SITUATION IN THE LAND MARKET     

ANALYSIS OF THE CURRENT SITUATION IN THE LAND MARKET

Borisov Vadim, Dyrdin Maxim (group O14A90),
Scientific supervisor: M.A. Puchenko
Language advisor: L.A. Lakhotuk
Tomsk, The National Research Tomsk Polytechnic University

Speaking about the current situation in the land market, it is necessary to say couple words about the "land" and "land market".

At all times the land has been considered to be the main natural (primary) factor of production, and this is due to its special role in economic activity. When we speak about the "land" we will mean only the surface of the soil, which can be used either for agriculture or construction of buildings and which is the buying and selling object in the land market.

Land market is the part of system of land relations, which have regulators of ownership (possession, use, and disposal), the ability to transfer this right (rent, sale, pledge), the monetary valuation and free forming of land prices. Debating the issue of land in Russia, it must be kept in mind that this is not only economic question describing the nation's macro-economic behavior, that the land is not only the main means of production in agriculture, but also the foundations of statehood, national identity and functioning of the entire national economy. Land factor plays a huge role in the well-being of the society as a whole and each separate part of this society individually, as the land is a special kind of resource defined by its limitations, non-renewable opportunity and versatility. Today there is no person who isn’t interested in land anyway.

Normative legal acts operating in the Russian Federation give the land owner the right to carry out the main types of land transactions. According to the legal acts of the Russian Federation and its subjects, the owners are entitled to rent, sell, donate and pledge the land. The data of land transactions reflect the main trends of the land market development in recent years in Russia and its subjects.

The lands located within the Russian Federation are the country's supply of land. The category of land is the part of the land supply allocated for the intended purpose and has a specific legal regime.

Current legislation provides seven land categories designated in Figure 1.


Figure 1 - The structure of the land by categories (Russian Federation)


According to the state statistical data the area of the land supply of the Russian Federation on January 1st 2009 amounted to 1 709.8 million hectares, including land held in state and municipal property - 1 576.9 million hectares, owned by legal entities - 8,6 million hectares and citizens - 124.3 million hectares.

Analysis of the data obtained from state statistical monitoring of land resources showed that in 2008 the considerable land areas were involved in the civil turnover.

If we look at the prices of different land types, we’ll see that it is given in the report of Economic Development and the Federal Real Estate Cadastre Agency of the status and land use in Russia in 2008. According to these data, the entire Russian land is valued at $ 1.8 trillion. This is two times less than the U.S. budget for the 2009-2010 fiscal years ($ 3.55 trillion). But this price is only for the land - it does not include marine areas and all kinds of natural resources available in the depths, values built on the surface and human capital. The vast majority of this wealth belongs to the state, but citizens also have made a pile since it became possible to buy land in private ownership. 7,3% of Russian territory belongs to the population, only 0,5% belongs to private business.

In terms of money the value of reindeer pastures in tundra is estimated at 9 kopecks per square meter. Garden and vegetable plots are another category of land worth one copeck. In Russia garden plot costs only 5.62 rub. per sq. m. on the average. Then six hundred square meters cost just a little more than 3,000 roubles. The most expensive land is in settlements intended for individual housing construction. According to the official version in Russia such land costs 119 roubles. per sq meter (11 900 roubles per one hundred square meters). There is an increasing demand for industrial use of lands. In urban areas such land costs 4,600 roubles for one hundred square meters, but out of human settlements - 600 roubles.

Unfortunately, all data given as the official ones can only be a guideline that describes a particular trend. They don’t reflect real figures. For example, the authorities believe that the most expensive garden plot in Krasnodar was sold in 2008 at a price of 6,000 roubles per one hundred square meters. In fact, the average price of such plot is 25 000 - 35 000 roubles for one hundred square meters.

Because of the undeveloped land market in Russia the normative land price is based on market prices and expert estimates only in quarter of the subjects of the Russian Federation. Almost in third of the subjects of the Russian Federation the normative land price is calculated in proportion to the rates of land tax.

Even on the basis of data on the dynamics of lands, we can conclude that the land resources of Russia have considerable potential. Another factor of the high potential can be dominant state and municipal ownership of the land. The composition of the ownership structure, as well as the structure of categories is dynamic, but the main reason is different, and namely the return of Russian land resources to the state, municipal or private property by the courts. In the future, with the development of jurisprudence and the improvement of legislation, changes in the structure of land recourses in Russia will only increase.

In our country, an area of unused agricultural land is amounted to 5 million hectares, including arable lands - 82% (4,120 hectares), but it is the missed opportunities to replenish the budget, using the land. The annual turnover of agricultural lands has no more than five percent of the entire lands. Governments face a dilemma either allow the land sale and increase the output of land from agricultural production or try to develop agroindustries and develop new agricultural lands. At the moment the first option, which is less costly in terms of money investments or any state efforts and brings many benefits in terms of users and less for the state, wins.

High cost of land development and undeveloped industrial infrastructure in rural areas as well as insufficient investments in agriculture and restoring the land is due to the problematic status of land market in Russia. Besides, there are some other factors (they are possible to avoid) that deter the formation of a fully-fledged land market. These include the lack of landowner’s state support, people distrust of the authorities and their economic policies carried out, the lack of development of medium-and long-term lending, corruption of authorities.

The Russian land market is still very weak. The fact that rates jump every year is evidence of that. Currently all transaction leases dominate (prevail over other transactions), but growing market, regulated by the state and reinforced by legislation, is trying to make this area real market with the guarantees and rights. The formation of a full-fledged land market in Russia is only beginning after long absence of private ownership. Now in Russia only 0.4% of land is privately owned. This fact suggests that in Russia land reform only begins, although officially it has been already operating for 18 years. The share of private ownership on the land market should grow gradually, taking into account the interests of all parties, and namely: the state and the owners.

In Russia, only 1% of land is in the turnover. For us to be able to create work places and get the income of the land market, it is necessary to change the rules of land turnover in Russia in the way that 100% of land will be used as it is in all developed countries.

In Russia, only 1% of land is in the turnover. For us to be able to create work places and get the income of the land market, it is necessary to change the rules of land turnover in Russia in the way that 100% of land will be used as it is in all developed countries.

Questions about the market land relations considered in this paper suggest the following conclusions:
1. The land is a specific factor of production. Its key feature it’s finite.
2. The main feature of economic relations associated with the use of land as a non-renewable, finite natural factor is the existence of land rent.
3. In a market economy, the land becomes a commodity form, it can be bought and sold. The price of land should be worth the money which, if put in the bank, will bring the landowner the same percentage of the invested capital.
4. Land relations are impossible without government regulation, without the development and arrangement of measures conducive to the development of effective forms of land ownership and management.

In conclusion, it should be noted that it's time to move to the development of the national budget in the Russian Federation, where not only gross national product, but also such a component as land will be assets of the state and its capital.

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