Russian stimulus package causes property boom

RUSSIA / FSU POLITICS - In Brief 16 Sep 2020 by Alex Teddy
On September 15 the Russian Central Bank's data showed that the government's scheme to revive the economy by supporting mortgages has caused property prices to rise. Mortgages in July and August were 40% up Y o Y. Prices for newly constructed buildings are up significantly.The government brought in a preferential mortgage program to boost construction and stimulate the property market. Lockdown in March brought the sector to standstill.Russians can be issued mortgages at a 6.5% interest rate. This applies to properties worth USD 160 000 in Moscow, St Petersburg and their environs. The program applies to properties worth USD 105 000 elsewhere.Mortgage rates were 9% before coronavirus. Interest rates had been cut to a record low. They were 7.3% in August 2020. Sberbank said that the prices of new apartments are up 30% in some regions and 10% in Moscow. Previously the property sector was worried that prices would drop precipitously.Construction companies have seen a 9% Y o Y increase in income in August 2020.

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