Page 134 - RusRPTMay21

18.6%, and Ryazan 17.6%. The Federal Anti-Monopoly Service (FAS) should look at the housing market, Putin instructed, “to see what is happening there.”
The FAS dutifully said that it would take up the issue, but policymakers don’t expect the agency to find much. Russia’s finance ministry and central bank have been warning for some time now that the government’s preferential mortgage program is leading to a spike in housing prices. The program, which was launched as part of the government’s COVID-19 response in April 2020, allows individuals to take out mortgages at 6.5% interest. The benefits were supposed to end in November 2020, but the government extended them through July 1.
These subsidized mortgages have led to a boom in housing demand. Last year, homebuyers in Russia took out RUB4.3 trillion ($55.6bn) in mortgages. Of this, RUB1 trillion were subsidized. CBR Governor Elvira Nabiullina has warned that the cheap mortgage rates are markedly decreasing housing affordability, while deputy finance minister Alexey Moisseev fears that they will attract subprime buyers and create a housing bubble.
Russia’s Ministry of Construction (MinStroy) and Ministry of Industry and Trade (MinPromTorg) say that rising costs of building materials are also partly to blame for increasing house prices.
The ministries held a meeting with metal producers on April 7 to discuss stabilizing metal prices. According to RBC, they’re mulling over two options. The first is to set an indicative price for metal products commonly used in construction. In this scenario, the government will likely tax the profits from any metals sold or exported for a higher price and use these revenues to pay for state construction projects. The second proposal is that the government offsets the rising costs of state construction projects by simply increasing the corporate tax rate for metallurgical companies.
The government has extended the programme of subsidised family mortgages to individual housing at a rate of 6%. Qualifying families are those that have a second or subsequent child between 1 January 2018 and the end of 2022. The participation parameters include the construction contract and a 15% down payment, while the mortgage is capped at RUB12mn for the Moscow and St Petersburg metropolitan areas, and RUB6mn for other regions.
Individual housing is an important driver of the overall completions, accounting for 40mn sqm and 48% of the total in 2020. The sector has faced headwinds from the lower infrastructure in remote areas and the lesser availability of mortgages (1% of the portfolio, according to the Ministry of Construction) due to higher credit risks and lower collateral liquidity.
The incremental uplift in completions due to the programme being extended is 2.8mn sqm annually, according to the National Agency for Low-Rise and
134 RUSSIA Country Report May 2021 www.intellinews.com