Page 86 - RusRPTNov20

their level from a few years ago, thus making home-ownership affordable for millions more Russians. The current subsidy scheme follows on from last year where the state was subsiding rates to bring them down to 10%, but ended the programme when Central Bank of Russia (CBR) rate cuts brought rates down to that level. The subsidy programme was restarted this year as a form of economic stimulus.
“The current rate is a record low level and has become a key tailwind for residential sales. Since its inception, the programme has covered RUB630bn in mortgage origination, which is 70% of the total limit (RUB900bn). In 9mo20, the total value of mortgages grew 38% y/y to RUB2.7 trillion (and the September figure was a record high). On the primary market, the programme has accounted for some 75% of total origination,” says Kolbina.
In 9mo20, participation in the subsidised mortgage programme resulted in differing trends for listed developers:​ ​PIK​’s RUB sales added 25% y/y and Etalon​ lagged, with a 20% y/y correction (as its offer is of a more premium nature), while​ ​LSR Group​ is to present its figures on October20.
The share of mortgage deals has risen 10- 13pp YTD to a total of 47-80%, with the vast majority under the subsidised mortgage programme.
According to Dom.RF, the share of escrow schemes in Moscow residential sales has reached 44%, ​and a further 47% were implemented with share participation agreements, while 9% of those sold were completed without clients’ funds during the construction stage. Escrow schemes and project financing were introduced from July 2019 for all new projects with completion status lower than 30% and less than 10% presold. Exceptions were granted for PIK and LSR, as socially important companies, with the completion threshold lowered to 6%. In Russia, the area under construction has declined 16% over the last twelve months, while the number of developers corrected 20% y/y to 2,508. Across listed homebuilders, the share of escrow sales is 15-40% while the top ten companies increased their share in the total area under construction in Russia 70bp y/y to 18%. The exception criteria mentioned above envisage a gradual sector transition over the 3-5 years and ongoing sector consolidation.
There is a risk of Russian mortgage market bubble, if a 6.5% lending program continues, ​Alexander Danilov, director of the banking oversight department, told PRIME in an interview released on October 9. "There are no reasons for worry now. About RUB400bn of loans were given in the framework of the program as of the beginning of September, while the total limit is RUB900bn. This is not much because the entire mortgage portfolio of banks stands at about RUB8.5 trillion," Danilov said. He said that the program can cause a demand and price rise. After its finish, the prices will fall again but if another crisis hits, people's income will fall and credit risks will increase.
86 ​RUSSIA Country Report​ November 2020 www.intellinews.com