Bank of Russia Calls for Targeted Mortgage Subsidies to Contain Inflation

Overview

• At a Dec. 19 press conference, Governor Elvira Nabiullina said preferential mortgage programs must be narrowly focused to prevent a surge in demand.
• She warned that broad subsidies inflate home prices and then lift costs through tighter labor markets and higher materials and equipment prices.
• The central bank stressed that any benefit program is ultimately paid for, so its scale should be limited and concentrated on priority recipients.
• National primary-market price growth has moderated versus last year, with regional divergence such as Krasnodar Krai posting a 4.3% rise, below inflation.
• Housing demand remains solid, with buyers also using developer installments and outstanding installment debt now about 1.5 trillion rubles.