The total area of apartment buildings under construction has decreased by about 18%, and the number of developers, by 14%, since July 2019.
One of the reasons the number of houses under construction has dwindled is the high number of new housing projects completed last year – more than 43.5 million sq. m., Vedomosti reported quoting the Dom.rf state company (formerly Agency for Housing Mortgage Lending, AHML).
Russia’s economy is going through a period of low economic growth (stagnation). With people’s real disposable incomes stagnating, there is no reason a solvent demand should grow. The mortgage market is also close to have exhausted the resources for further growth, with too few high-quality borrowers available, according to economist Sergei Khestanov, Associate Professor at RANEPA.
“Relaxed requirements for borrowers are fraught with a mortgage crisis – a lesson from Japan’s experience. A construction slowdown is in any case better than a mortgage crisis,” the expert said.
As you know, the Japanese asset price bubble developed from the late 1980s to the early 1990s, with real estate and stock market prices greatly inflated. After that price bubble burst, it led to a long period of stagnation, now referred to as the Lost Decade.