On Wednesday, January 22, Russian Prime Minister Mikhail Mishustin instructed the Ministry of Finance and the Ministry of Labor to prepare amendments to the law on the federal budget for 2020-2022. Changes are needed to fulfill the tasks set by the president in a message to the Federal Assembly. This is stated on the official website of the government.
On the eve of Mishustin held the first meeting of the new Cabinet. The Prime Minister called on ministers to create conditions for economic growth and urgently begin to fulfill tasks in the field of demography and the growth of welfare of citizens.
“We must as quickly as possible begin to implement the tasks that the president set in his message: this is demography, support for families with children, increasing people's incomes, caring for those who need state assistance,” Mishustin said.
On January 15, Vladimir Putin, in a message to the Federal Assembly, proposed expanding the maternity capital program. Families will have the right to receive 466 thousand rubles when the first-born appears, and payments for the birth of a second child will amount to 616 thousand rubles. The announced measures should come into force on January 1, 2020, and the material assistance program for families should be extended for at least five years.
“Now this program is designed for the period until December 31, 2021. We will extend this program until at least December 31, 2026, ”Putin said.
As the president reminded, already at the birth of the third child, the state repays part of the mortgage loan for the family in the amount of 450 thousand rubles. Thus, after the introduction of the announced measures, families with three children will be able to send over 1 million rubles to solve the housing problem.
“The payment of maternity capital at the birth of the first child can significantly support the demand for real estate and mortgages. This is especially true for the Russian regions, since there the average level of wages and the cost of housing are lower than in Moscow and St. Petersburg, ”said Vladimir Savchenkov, CEO of Fly Planning, in an interview with RT.
In 2019, the average size of a mortgage in Moscow reached 5.5 million rubles. Such calculations were presented by the Miel real estate agency. At the same time, the average mortgage in Russia amounted to 2.1 million rubles. This is stated in a study of Bank DOM.RF. Thus, after expanding the mother capital program, families with two and three children in the regions will be able to cover up to 50% of the cost of housing.
“Taking into account mortgages already approved by banks in 2020, demand for real estate will grow by 5-7%. This factor is unlikely to lead to a significant increase in prices. Today, in most regions, more housing is being built than citizens can acquire. Therefore, in general, we do not see risks for the real estate market from expanding the maternity capital program, ”explained Pyotr Pushkaryov, TeleTrade chief analyst, in an interview with RT.
Recall that the maternity capital program has been operating in Russia since 2007. Over 13 years, more than 9.5 million families received certificates for material support from the state. This was previously stated by Deputy Prime Minister Tatyana Golikova. According to her, in 2020, budget expenditures on maternity capital will amount to about 100 billion rubles. Moreover, by 2023, the amount may increase to 290 billion rubles.
Price issue
In addition to the maternity capital program, demand in the Russian real estate market can be supported by lower mortgage rates. According to the latest data from the Central Bank, the average mortgage rate in Russia has updated its historical low and dropped to 9.19% per annum. At the same time, in 2020 the value may decrease to 8.5%. About this in an interview with RT told financial analyst at BCS Premier Sergey Deineka.
“If the Bank of Russia continues to soften its monetary policy, and inflation remains stable in the coming years, the Central Bank’s key rate may drop to 5-5.5% per annum. In this case, mortgage rates will move to the level of 6.5-8%, and demand for housing will increase, ”added Deineka.
In addition, the Russian real estate market is still affected by the transition to a project financing system for housing construction. From July 1, 2019, developers can no longer attract money from equity holders directly. Now citizens place their funds for the purchase of housing on the so-called escrow accounts. This is a special bank account for the safe conduct of transactions between companies and the public.
Money for the purchase of real estate is stored in the bank until the developer fully fulfills its obligations. So, for example, a construction company will be able to receive funds from equity holders only after the introduction of housing into operation. The performers themselves will carry out construction work at the expense of bank loans.
“After the introduction of project financing in 2019, the costs of developers increased, and the cost of housing on average in Russia increased by 8-10%. In 2020, the price increase may reach about 10%, but further rise in price per square meter will already be unprofitable for companies. The market is now very close to the highest offer price, so if developers continue to increase prices, home sales will stop growing, ”said Vladimir Savchenkov.