Housing market imbalance, systemic risk and regulatory Practices

Abstract

The relevance of the topic of the article is due to its lack of research and the need to understand the impact of prolonged anti-crisis measures on housing affordability. The subject of the study is the imbalance between the primary and secondary housing markets. The objectives of the work are to identify the causes of price imbalances in the primary and secondary residential real estate markets in 2020–2024, the accumulation of systemic risk in the banking system due to the rapid growth in mortgage loans and to establish the effectiveness of macroprudential and monetary regulatory measures during the period of the large–scale non-targeted preferential mortgage program. It is proved that the credit boom and the unbalanced rise in prices for housing under construction and ready-made housing have led to the appearance of signs of a bubble in the residential real estate market. At the same time, risks began to accumulate in bank loan portfolios due to the involvement of high-risk groups of borrowers in mortgage lending, lower down payments, significantly extended loan terms and overvalued collateral. The increase in the creditworthiness of mortgage borrowers, and simultaneously by several banks. It has been demonstrated that due to the high proportion of loans with subsidized interest rates in bank portfolios, which weaken the impulses of monetary regulation, macroprudential measures have a greater impact on banks’ activities than an increase in the key interest rate.

 Based on a systematic analysis of statistical data, materials from the Bank of Russia and economic publications, it was concluded that preferential mortgage programs have increased housing affordability for the population only for a short period of time, whereas with increasing demand for new buildings and prices for them, developers and lending banks have become beneficiaries of the extension of the state support program.