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Russia extends cheap mortgages to boost construction

Monday, November 2, 2020

Significance

The explanation lies in a government scheme offering subsidised mortgages, which drew prospective buyers to move faster than they might otherwise have done. While housing demand remains comparatively buoyant, high street shops have suffered badly from reduced footfall, affecting rental costs.

Impacts

  • In 2021, the shrinking size of the middle class will dampen demand for residential properties.
  • The risk of financial instability stemming from mortgage over-issuance is low as banks' exposure to these loans is still limited.
  • The growth in e-commerce will redirect some property investment from retail outlets to warehousing.

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