Tatarstan full of mortgages

Analysts have determined the regions where a mortgage is taken out the most. Tatarstan is fifth after two capitals and oil regions

Tatarstan full of mortgages

One in three families in Tatarstan have a mortgage taken out after the crises in 2008 and 2014-2015, analysts calculated. With its loan burden, Kazan outstrips Moscow and Saint Petersburg where 7,5 and 4,3 families respectively have a loan, while our number is 3,3. Here Kazan starts to follow Moscow’s road it took in the 90s when housing prices started to fall behind salaries under the pressure of investment demand. Now a square metre price in Kazan is three times higher than the average salary in Tatarstan.

Tatarstan is fifth in mortgages

423,000 mortgages were granted in Tatarstan, one in three families on average repay a long-term mortgage, reads Russian rental and real estate site CIAN’s research. Its analysts found out what regions had the biggest number of loans per family and where a mortgage is in low demand. Tatarstan is in the top 10 regions with the biggest growth of the mortgage market, which means more houses are purchased with the help of a mortgage. The republic ranks fifth in number of deals sealed after a currency crisis (2015-2020). The total size of the mortgage portfolio is 624,7 billion rubles, or 3,9% of the Russian size, the analysts calculated on the basis of the Central Bank’s data.

Director of Etagi’s branch Marat Gallyamov confirmed to Realnoe Vremya that the mortgage gained momentum in 2020. It accounted for 60-62% of the total sales of the company in 2019, while in 2020, it rose to 65-68%:

“High demand for housing from families, people who want to live in Tatarstan as a favourable region makes itself known. People improve their living conditions, some buy the first home because they hope for the best. People aren’t afraid: they have some job, they receive a salary, our region isn’t depressive, it is very active. This helps us to quite actively live here in our republic, purchase a flat and believe in the future.”

But there is another reason, it may be even the main— an upsurge in prices. The average price in new builds rose from 70,000 rubles per square metres to 110,000 rubles per square metre. And the fear that the price will skyrocket pushes Tatarstan residents to buy their own flat: “Go and buy, it will be maybe hard for you to pay for it, but you have to buy it, at least you will save the price”. The price didn’t increase in other regions as suddenly as it did in Tatarstan. This is why the fear that the price will be exorbitant in a year and a person won’t be able to buy a flat works as catalyst.

Loan becomes 3 times bigger and 5 years longer

However, Tatarstan residents’ credit burden has become notably heavier over these years. If the average price of a mortgage was 700,000 rubles (in 2009), now it is 2,1 million rubles (in 2020). Moreover, a mortgage repayment term has grown too — from 12,4 years to 18,4 years.

According to the National Bureau of Credit Histories, a recommended family income of a Tatarstan family should be no less than 60,900 rubles to comfortably repay a mortgage. This will be enough, so a monthly payment won’t be bigger than a third of the monthly income. The research reads, that the debt in mortgages in Tatarstan is the lowest, which means that the majority manages to repay it.

“The fact that one in three families repay a mortgage means that the salary allows them to improve their living conditions,” says leading analyst at CIAN Viktoria Kiryukhina. “Tatarstan has the highest salary in the Volga Federal District. Moreover, housing development is active here, which allows choosing a good dwelling.”

The Caucasus doesn’t want to carry the mortgage yoke

Moscow with around 590,000 mortgages, 5,6% of the total number across Russia was a leader from 2009 to 2020. Moscow Oblast (540,000 mortgages) is second, Tyumen Oblast (470,000 mortgages) is third.

“The list of leading regions almost hasn’t changed in the last six years: in 2016-2017, Krasnoyarsk Krai replaced Samara Oblast, which was in the top 10. In 2018, in turn, it was substituted by Novosibirsk Oblast. Moreover, from 2010 to 2012, precisely Tyumen Oblast was first with the number of mortgages, which is linked with a big amount of solvent employees working in the oil and gas sector,” authors of the research note.

The lowest number of mortgages among all Russian regions was found from 2009 to 2020 in Ingushetia (1,900), a loan per 36 families on average, this is the country’s lowest indicator. Chechnya (8,100 mortgages, one agreement per 32 families) is also in the top 3 regions with the smallest number of agreements. Dagestan has few mortgages per family (one loan per 24 families). The North Caucasian Federal District distinguishes itself for high demand for private, not industrial development, which explains the low share of mortgages per family.

One in three people are in debt

From a perspective of the number of families per loan, Kazan (3,3) went ahead of Moscow where 7,5 families repay a debt and Moscow Oblast where 5,1 families have one loan. By the way, this is the country’s average number. Kazan gave way only to Tyumen Oblast where 2,6 families repay a loan.

With the growth of the mortgage burden, Kazan starts to follow the road of Moscow where the price for a square metre considering the investment growth started to catch up with the real salary, the analysts explain.

“Now, the price for a square metre in Kazan is 2,5-3 times higher than the average salary of 40,000 rubles now. The high price for housing compared to the salary explains the loan burden of Kazan citizens,” thinks head of Tatarstan’s Guild of Realtors Andrey Savelyev.

According to him, an incredibly big number of loans was granted during the preferential mortgage when it was enough to pay the first instalment of 500,000 rubles. “And if a baby was born, the sum was smaller. So a lot of Kazan citizens decided to buy enough investment housing,” he indicated. He forecasts the housing price will rise by around 10%. Moreover, the housing price covers loan rates of 6,5-7,3%. According to other data, new homes rose by 12,3% a year, while second-hand dwelling did by 14,5%.

Price range of Kazan

The average price of a square metre in the market of new homes is diversified depending on the district. The most expensive realty is traditionally in the city centre, Vakhitovsky District (125,800 rubles). It is followed by Aviastroitelny and Novo-Savinovsky (111-112,000 rubles). Kirov District is the cheapest (77,200 rubles). Privolzhsky District was also at the bottom of the list (86,900 rubles). New real estate in Moscovsky and Sovetsky Districts (94,000 rubles per square metre) has the average price. So housing “in the periphery” and city centre still significantly differs in price. The difference between the average realty price in the most expensive and cheapest districts is more than 2,5 times.

“Thanks to a reduction of rates and higher demand for mortgages, the total amount of residential areas per one resident on average increases year after year,” comments Alexey Popov, head of CIAN’s Analytic Centre. “In 2009, immediately after the crisis, a citizen had 21,8 square metres on average. In 2019, the area already was 25,9 square metres. The growth was 19%. Nevertheless, due to a deficit of new construction projects, residents of some districts almost don’t show activity, they don’t have an opportunity to choose new projects. This is why it won’t be possible to reach equal growth of housing thanks to a fall in the mortgage rate — it is necessary to stimulate developers’ activity, for instance, with the help of public and private partnership or additional subsidies.”

It seems that one will have to forget about holiday and eat only buckwheat. “In reality, the statistics of the National Bureau of Credit Histories show that the average mortgage repayment term in Russia is seven years (moreover, the average mortgage loan term is equal to 18,1 years), many simply repay their loans in advance and without fines preferring to decrease the amount of overpayment,” experts and market players allayed the fears.

By Luiza Ignatyeva