Mortgage and construction: trends and risks

Abstract

Object: Construction industry and mortgage lending in the Republic of Kazakhstan. The subject of research: identifying the features of mortgage lending and its impact on the development of the construction industry during a pandemic. The purpose of the study is to establish the risks of mortgage lending based on the held analysis and the identified trends in the construction industry in the periods before and after the pandemic.
Methods: The economic-statistical methods, calculation of the relative indicators of statistics, analysis, a method of research data visualization.
Results: According to experts, construction is the only industry that suffered the least during the pandemic. The saved degree of the construction industry’s development, as long as other factors, has led to a significant increase in mortgage lending. Along with this, despite the implemented quarantine measures, the level of unemployment increased. The article provides a literary review of relevant researches on this issue, considers the reasons for the rapid growth of the industry during a pandemic, investigates the dynamics of indicators, identifies the risks of a mortgage bubble appearance.
Conclusions: Investments in residential construction are increasing every year; the supply on the market is similarly growing; demand for real estate is not falling. After analyzing the indices of real incomes, prices in construction, as well as the average cost of 1 square meter of new housing, we conclude that the rise in real estate prices was caused artificially, the market adjusted to high prices. In parallel with the development of the construction business and mortgage programs, there is a significant decrease in the level of paying capacity of the population, because of the decrease in the national economy’s growth rate under the held quarantine measures, which may lead to the formation of a “mortgage bubble”.