Outlook for Russia’s Housing and Mortgage Market, Q1 2013
| Date Published | 10/24/2013 |
| Author | Marja Hoek-Smit |
| Theme | |
| Country | Russian Federation |
Outlook for Russia’s Housing and Mortgage
Market, Q1 2013
October 20, 2013
The Agency
for Housing Mortgage Lending published its quarterly report on Russia’s housing
and mortgage market for Q1 2013. Summary conclusions are as follows:
- The Russian economy has slowed down for the
fifth consecutive quarter. The likelihood of a recession and high rates on
retail deposits have put pressure on the interest rates for both retail lending
and loans to the real economy. The expansion of the mortgage market is,
therefore, projected to be well below its growth rate of 40% in the previous year.
- The mortgage market rose only to 109 percent YoY
by volume and 121 percent by value in March 2013. Q1, 2013 had 1.12 times more
mortgage originations than Q1 2012 (142,393 retail mortgage loans with a total
value of RUB 226,933bn).
- Banks’ balance sheets have observed an expansion
of their mortgage portfolio by 36 percentYoY (April 1, 2013). As banks
continued to build up their mortgage portfolios, the volume of non-performing
loans shrank both in relative and absolute terms (1.7 percent of total value,
April 1, 2013), pointing to consistently good portfolio quality.
- Mortgage portfolios are facing a higher risk of
deteriorating in the medium term. Several main
banks are relaxing their underwriting standards to attract more customers
–they no longer require proof of income from borrowers.
- Housing market growth is slowing down. The
number of registered housing transfers decreased, but the share of transfers
using a mortgage grew. Twenty percent of registered housing deals in Q1 2013 used
a mortgage loan, an all-time high since the beginning of active mortgage
lending in Russia.
- Housing prices continued to rise in nominal
terms but in line with inflation. The housing affordability index did not
change much since 2010.
- The housing construction sector performed well (12.8%
and 6.5% increase from Q1 2012 in commission of new houses and apartments
respectively). However, the number of new construction contracts for the
quarter dropped to historical lows which indicate a risk of recession in the
construction sector.
- AHML expects approximately 700-800 thousand
loans for a total of approximately RUB 1.2tn to be issued in 2013.
For full
report, see here.