Real Estate Demand Falls in Moscow after Mortgage Rate Increase
Residential sales in the Moscow region, Russia's largest primary real estate market, slid 31% in August compared with June, cooling down after the government increased rates as part of a state-backed mortgage programme, a survey by real estate database CIAN showed on 13th September. State mortgage subsidies were introduced last year to inject some life into Russia's struggling economy, hit by the global coronavirus pandemic and an oil price crash. This caused a price boom on the primary and secondary real estate markets, with mortgage loans expanding by nearly 35% in 2020. In July, the government raised the state-backed mortgage rate to 7% and cut the credit limit to 3 million roubles ($41,300), making it difficult for potential buyers to secure a loan. "August 2021 is the first month that objectively reflects the situation, with a decline in demand after the revision of the mortgage lending programme," analysts at CIAN said. The number of new mortgage loans approved in the Moscow region decreased by 40% in August versus June, when the previous mortgage programme was in place, CIAN said. The database provided data for the Moscow region only, Russia's largest by transaction volumes. The Russian central bank expects real estate prices to cool with the changes to the state-backed mortgage programme, Governor Elvira Nabiullina said on Friday.
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