HOUSING DEMAND IN A TRANSITIONAL MARKET: MOSCOW

Before Russia began its transition toward the market, its housing sector was perhaps the most controlled in the world. This paper employs data from a 1994 survey of Moscow households to estimate housing demand functions to evaluate whether behavior is consistent with market principles. Statistically significant, robust income elasticities are found for families who have engaged in recent market housing transfers. Insignificant results are found for those renting state-owned units. Families who have engaged in market housing transfers are smaller, younger and wealthier than other families in Moscow and end up living in less crowded conditions than state renters. The use of per capita living space as a proxy for market value, as has been done in previous studies of housing in Russia and the Soviet Union, is also evaluated.