Results of the Far East Mortgage Program for Consumers, Developers, and the Government

Abstract

The volume of mortgage loans issued in eleven regions of the Far Eastern Federal District at the end of 2023 increased 2.5 times by the start of the Far Eastern Mortgage program in 2020. The most interesting result of the program is an increase in demand for primary real estate and a simultaneous decrease in the affordability of this housing. Since the start of the program, prices have increased by 116% vs. 26% while maintaining historical growth rates. By the end of 2021, the price of an apartment, including interest under the Far East Program, has become higher than that of an apartment while maintaining the historical rate of price appreciation under the family mortgage rate. The program has effectively made housing less affordable. The main conclusion is that for program participants (young families under 35), the most effective benefit of stimulating home buying is lower interest payments, not down payments. The main beneficiaries of rising prices and the scale of lending are developers. Considering the increased price of construction materials, the developers’ margin in the Far Eastern Federal District in 2023 increased to 58%. On the one hand, the government has achieved its goal of boosting the housing market in the Far East and has found an effective tool to encourage young families to buy real estate. This is evidenced by the extension of the program until 2030. On the other hand, several economic shocks led to a significant increase in the key interest rate and the accompanying growth of the program implementation costs.