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Russia’s housing construction shifts to growth

Russia’s housing construction shifts to growth

The latest data on housing supply published by the Federal State Statistics Service (Rosstat) at the end of September show that August was one of the most propitious months for the housing construction industry. The housing supply started growing for the first time since the beginning of 2017.

According to Rosstat’s current estimates, some 6,287 thousand sq m of housing was commissioned in August, up 13.6% y-o-y. Following a seven-month decline in monthly y-o-y supply growth rates, the construction sector has finally moved into a positive territory primarily due to the increase in supply of apartment buildings (+18.7% compared to August 2016).

The AHML Research Centre reports that, with large volumes of housing under construction (around 120 million sq m) and stronger popular demand for high-quality standard housing on the back of decreasing mortgage rates, the stage is fully set for further growth in the industry. As a reminder, the mortgage rates currently offered by the largest market players stand at 9.5–9.6%, the lowest in the recorded mortgage lending history. AHML offers mortgage rates starting from 9%.

Prospective homebuyers are not the only ones who will benefit from lower mortgage rates: with mortgage refinancing programmes becoming increasingly popular lately, mortgagors can significantly decrease their monthly payments. With the initial mortgage rate decreasing from 13% to 9.5%, borrowers can save over 20% of the original amount payable.