Page 16 - RusRPTJan23

Ukraine, which has its own grain exports, insists on the most stringent sanctions. EU leaders - Germany, France and the Netherlands - are asking for the easing of sanctions against Russian grain and fertilisers (in the interests of the poorest countries in Africa), the Financial Times wrote today. Their regime may be specified in the ninth package, which the EU will discuss next week.
2.6 Residential real estate bubble forming as Putin extends mortgages subsidies
Russian President Vladimir Putin gave another year of life to the bubble in the Russian real estate market by announcing the extension of the preferential mortgage program until July 1, 2024. The Central Bank and the Accounts Chamber insisted on the need to quickly curtail the program - because of preferential mortgages, prices in the primary market soared, and a bubble formed in the market.
The fact that the preferential mortgage program will be extended until July 2024 was announced by Vladimir Putin at a meeting of the Council for Strategic Development and National Projects. His speech was so full of announcements of new benefits and policy statements that journalists asked Dmitry Peskov if this was not the same as the address to the Federal Assembly, which Putin refused this year, as well as a big press conference and a direct line.
The subsidized mortgage program was due to expire on December 31, 2022. “As agreed, we will curtail the mechanisms of preferential mortgages. But we will do it smoothly,” Putin said. Then he announced the extension of preferential mortgages for new buildings for a year and a half. Concessions to skeptics - the rate is 8% instead of 7%. True, access to a family mortgage at 6% will even be expanded and extended to families with two children under 18 years old. And in the "new territories" the rate will be 2%.
The preferential mortgage program has been operating in Russia since 2020. During this time, more than 750,000 loans worth more than RUB2.25 trillion were issued, about RUB60bn were reimbursed to banks. The maximum amount of a preferential mortgage loan for Moscow and the Moscow region, St. Petersburg and the Leningrad region is RUB12mn, for other regions - up to RUB6mn.
The soft mortgage program, originally designed to support the market during the pandemic, has led to serious imbalances in the Russian real estate market. Sergei Skatov, former chief analyst at Dom.RF, spoke about the bubble that has formed in the real estate market in an article on our website.
At the end of 2020-2021, about 90% of all mortgage loans in the primary market were issued under government-supported mortgage programs. This caused a rapid increase in prices in the primary market (by about 20% in 2022) and a doubling (up to 40%) of the price gap between the primary market and the secondary market. This, in turn, forced developers and banks to start
16 RUSSIA Country Report January 2023 www.intellinews.com