Russian residential real estate construction is set to fall 10-15 percent this year and mortgage lending by half, an official for the Construction, Housing and Utilities Ministry told news agency Interfax late last week.
Mortgage lending could plummet even further compared to last year if Russia does not provide 400 billion rubles ($12 billion) in subsidies to builders and banks, Gayan Kizaryants, director of the construction ministry's department of residential policy, told Interfax. Last year Russia's mortgage lending stood at 1.7 trillion rubles ($268 billion).
Mortgage lending has already fallen steeply this year, rocked by the Central Bank's decision to hold the key interest rate at a steep 15 percent in January. January lending dropped by 35 to 40 percent compared to last year's figures, news agency RIA Novosti reported Investorgbank head Vladimir Gudkov as saying earlier this month.
Russian house buyers are also being pressured by an increasingly worse economy, which is expected to contract by as much as 5 percent this year amid low oil prices and punishing Western sanctions over Moscow's role in the Ukraine crisis.
According to data from state statistics agency Rosstat, residential construction grew by 34 percent in January compared to last year for a total of 6.2 million square meters built. However, construction growth is likely to slow, Kizaryants said, as flagging demand eats away at developers' plans.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.
