There is no need to wait for a decrease in prices per square meter
The Russian government has adopted a new program of preferential mortgages: since July, it has become more expensive and irrelevant for most residents of large cities. The attraction of funds for new buildings will obviously slow down, as will the growth in demand in the primary market. Nevertheless, one should not expect a collapse in property prices, experts say.
The state program to support mortgage lending was adopted by the Russian government in the midst of the pandemic-caused economic crisis in April last year. It received the name “Mortgage 6.5%” – it was at the level of 6.5% per annum that the maximum rate on mortgage loans for the purchase of housing in a new building for citizens participating in the program was set. The difference between this rate and the “market” (calculated based on the value of the key rate of the Central Bank) level of interest rates to creditor banks was compensated by the state. Initially, it was assumed that the program will operate until November 2020, but then it was extended until the end of the first half of 2021.
Rescue of builders
The program had an obvious macroeconomic goal – to support the construction industry during the crisis. In general, we succeeded. According to Deputy Prime Minister Marat Khusnullin, the program “has become one of the most effective anti-crisis measures.” “Without mortgages, the industry would be deprived of the necessary funding. This would lead to a halt in construction projects, unemployment in the industry and a reduction in regional budget revenues. The risks of unfinished construction for equity holders would also increase, ”he explained.
“The main goal of the program was to help the construction sector,” says Mikhail Matovnikov, chief analyst at Sberbank. – Social problems – first of all, the task of providing the population with housing – was also meant. Still, the priority was to prevent a fall in the construction sector and help the economy through this, because builders have many contractors, and their support measures have a significant multiplier effect. And this goal has certainly been achieved, despite the crisis, the construction sector has become more active, the latest statistics show an increase in the volume of launching new projects. “
Indeed, the “Mortgage 6.5%” was very popular, especially since the issuance rates on it in practice were even lower than 6.5% per annum (the weighted average rate in May-June was around 5.6% per annum), which against the background The rapidly rising inflation (its official level by the beginning of 2021 exceeded 5% in annual terms, and by June reached 6.5%) looked like a gift. Over the 14 months of the preferential state program, more than 550 thousand loans were issued for the amount of 1.74 trillion rubles. Such volumes of loans mean that, taking into account the initial payment (at least 15% of the cost of housing), at least 2 trillion rubles were received by the construction industry under the program.
Come on, the price has risen!
“The program, of course, was used by those who would have taken a mortgage without it,” says Mikhail Matovnikov. – Nevertheless, its effect was very significant. According to our estimates, the volume of mortgage lending in the primary market last year was 15% more than it would have been in the absence of this program. “
However, as the Bank of Russia noted in its analytical materials, the benefit of borrowers from subsidizing rates at the expense of the budget “was largely offset by a sharp rise in the cost of housing.” Indeed, according to Rosstat, according to the results of the first quarter of 2021, housing prices in Russia increased in the primary market by 17.6% compared to the end of the first quarter of 2020 (that is, by the time when the ruble has already weakened), in the secondary market – by 13.6%. And this is despite low inflation and lower incomes of the population.
“During the implementation of the program, there was an imbalance between supply and demand in the market,” says Yekaterina Shchurikhina, Junior Director for Banking Ratings at Expert RA. – The demand for primary housing was actively growing, which stimulated the rise in prices with a limited supply. As a result, in many regions the increase in real estate prices “ate up” the benefit from the rate cut by the middle of the program’s life. In addition, low rates stimulated the population to actively apply for mortgages in anticipation of the imminent end of the program. “
The preferential mortgage at 6.5% served as an impetus for the rapid growth of mortgage issues, which led to a significant increase in real estate prices in many cities, especially in millionaires, where the cost of real estate is higher than in comparatively smaller cities or on average in Russia, the director of the group notes. ratings of financial institutions ACRA Irina Nosova.
True, according to Marat Khusnullin, the preferential mortgage itself led to an increase in housing prices by only 4-5%, everything else is the consequences of the fact that construction work was suspended due to the pandemic and quarantine measures, which led to a decrease in supply on the market …
Nevertheless, by the end of the first half of the year, the authorities came to the conclusion that it was time to curtail the program of preferential mortgages. A preferential mortgage at 6.5% was a temporary measure to support the population and developers during the crisis caused by the coronavirus pandemic in 2020, explains Ekaterina Shchurikhina. Accordingly, in the current state of the economy, its completion or reduction was absolutely logical, since preferential programs for a wide range of borrowers lead to imbalances in supply and demand in the market.
Change of emphasis
But the preferential mortgage has not sunk into oblivion: it is just that the old program has been replaced by a new one – with state support, which will operate until mid-2022. Its introduction was announced by Russian President Vladimir Putin at the beginning of June, at the end of the first month of summer a corresponding government decree was issued.
It differed radically from its predecessor. First of all, the permissible amounts of loans were sharply reduced – their maximum size will now be 3 million rubles (earlier for residents of Moscow, the Moscow region, St. Petersburg and the Leningrad region, this amount was 12 million rubles, for other regions – 6 million rubles). The maximum interest rate also slightly increased not in favor of consumers – from 6.5% to 7% per annum.
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