The President of the Mongolian Construction Association, M.Batbaatar, answers our journalist`s questions on several issues in the sector.

Why have apartment prices been rising?

There was little construction in recent times and that was why prices rose, with more demand than supply. However, this will change as the Government’s 100,000 Apartments program takes off. Construction companies know this and have been trying to sell off  their highly priced apartments before the fall begins.  It is all a matter of supply and demand.

Why then do builders blame the price rise on increasing cost of building material?

I don’t agree with those who say so. Prices of material have gone up but not enough to have an impact on the final price of an apartment.  The main expenses for construction companies are on land and on installation of power and sewerage lines. The cost of building material causes concern only if their regular supply is affected because of maybe something at the border.   

Apartments will be beyond the reach of middle-income people if prices do not come down? What chances do you see of this?

As I already said, the start of the 100,000 Apartments program is certain to make apartments considerably cheaper.  The Government will provide free land and will also bear the costs of power and sewerage connection.  Both will mean considerable savings for the buyer. Besides, the program is targeted at low- and middle-income groups, so the end cost has to be what they can afford.  

When do you expect the fall in prices to begin?

We expect this at the end of the year, or in the beginning of 2012. I am confident prices will be within the reach of first-time buyers or low-income people.

Do you think people will get apartment loans from commercial banks at 6 percent interest?

Not without Government intervention. Commercial banks cannot issue such cheap loans, especially to low- or middle-income people who cannot pledge proper collateral.