Photo: Oleg Karsaev / “Kommersant”
The entire current demand for the purchase of new apartments with the assistance of a mortgage in Russia will be exhausted within 7-9 years. New sources of demand is unlikely to emerge, and this can lead to a collapse in the cost of housing after 2024, said in a research note “Challenges and risks of debt financing of housing construction”, published by the Central Bank.
The document analyses the prospects for the implementation of the national project “Housing and the urban environment”, involving an increase in the annual volume of housing construction up to a record high of 120 million square meters by 2024 (+30 per cent by 2018). Experts of the Central Bank noted that achievement of targets is likely to face a number of constraints on the demand side. “The problem deals with the demand or fraught with rapid growth in housing prices (if demand significantly exceeds supply) or falling prices (if the demand for the housing built will not be sufficient)”, — they emphasize.
The Central Bank forecast a reduction in the number of potential mortgage holders in the coming decade. “Short time horizon does not allow to count on the emergence of millions of new families that would be interested in mortgages”, — stated in the published note. Reducing demand for mortgages, in turn, will lead to “a sharp drop in housing prices and construction volumes over the horizon of the national project”, i.e. after 2024.
Such an outcome in the CBA called undesirable from the point of view of all participants in the housing market — construction companies, banks and individuals.
Earlier in July it became known that Russia is ahead of Europe in growth of housing prices. According to Eurostat, in the first quarter of 2019, the property prices in the Euro area and the European Union increased by 4 percent compared with the figure for the same period of 2018. In Russia the annual increase was more pronounced at the level of 9 percent.
Video, photo All from Russia.