Housing in Dushanbe: we build a lot, but prices keep rising

Housing prices in Dushanbe began to rise this year after last year’s decline during the onset of the COVID-19 pandemic and the related restrictive measures. We found out what the reason is and learned how affordable square meters are in the capitals of other countries of the region and Russia.

The cost of new housing in Dushanbe has risen since the beginning of this year, despite a noticeable increase in living space put into operation since the start of the year.

Alisher Sohibov, director of the real estate company «Real Estate in Dushanbe», told «Asia-Plus» that the average cost of one square meter in a new development today is $500-900 depending on the building’s prestige and its location in the city. At the same time, the amount of living space put into operation this year increased by 15% - according to official statistics, in the first half of this year about 72 thousand square meters of housing were put into operation in the republic. 

Specialists attribute the rise in housing prices this year partly to growing demand for it, linked to the recovery of the population’s economic activity after last year’s downturn. This includes, in particular, the recovery of migrants’ remittances, as well as the growth of the population’s domestic incomes.

Another reason for the rise in housing costs in Dushanbe, according to A. Sohibov, is the rise in the price of building materials. The realtor’s words are confirmed by official statistics, according to which the main building materials have risen in price by 39%.  

Incidentally, Sohibov claims that today developers pay primary attention precisely to quality, since in recent years oversight by the relevant state structures has intensified. According to him, if in past years state acceptance was more «liberal», today this procedure is strictly controlled and special attention is paid to the quality of new developments. Sohibov noted that the construction of houses is monitored from the laying of the foundation and the erection of the building shell to the installation of engineering networks, finishing work and so on.

The main brake on the market  

One of the main barriers to the development of the real estate market both in the capital and in the republic as a whole, according to the realtor, is the high mortgage interest rate. 

Mortgage legislation has existed in Tajikistan since the late 2000s, yet even today these loans are not particularly in demand among the population. The mortgage interest rate remains very high - 22% per annum. Housing acquired with loans at such a rate costs the buyer 2.5 times more.

And how is it for them?

Reviews of real estate markets in other capitals of Central Asia and Russia show that housing prices in Dushanbe are lower. But this does not mean that apartments are more affordable here. The point is that the incomes of the population in Dushanbe and, accordingly, its solvency are much lower than  in the countries of the region or in Russia.

The average monthly nominal salary in the republic, according to official statistics, is $134. For comparison: in Kyrgyzstan the average salary is $220, in Uzbekistan - $230, in Turkmenistan - $235, in Kazakhstan - $470, and in Russia - $780.

In addition, access to real estate in these countries is made easier by the availability of mortgage lending on more attractive terms.

Bishkek

The average cost of one square meter of housing in the capital of Kyrgyzstan this year passed $800: a square meter of budget housing is $450, housing for the middle class - $750, and premium class - from $1300.

The rise in prices per square meter is explained by the devaluation of the national currency, the increase in the cost of building materials and growing demand in the market with the recovery of the population’s economic activity both within the country and abroad (labor migration).

Many people acquire housing with loans; the average mortgage rate in Kyrgyzstan is an order of magnitude lower than in Tajikistan - 16%.

But the main method of paying for primary housing is installments from three months to two years.

Kyrgyz developers, to attract clients, widely use such effective promotions as, for example, «Trade in your old apartment for a new one» or «Get an apartment for a car». 

Tashkent

The average cost of a square meter of housing in Tashkent is approximately $800.

Despite the high cost of housing compared to other Uzbek cities, about a third of all purchase-and-sale transactions in the neighboring republic occur in Tashkent.

Housing affordability in Uzbekistan was improved from 2020 by shifting mortgages to market mechanisms. Now a mortgage under the state program is allocated for the acquisition of any apartment on the primary market (previously only in standard houses being built in certain districts of the city).  

The authorities stopped directly financing the construction of houses and channel funds into banks in order to provide the mortgage market with long-term resources. Currently the government places funds in banks at 15−16% per annum, with which banks issue mortgages to the population at the market rate. 

Ashgabat

Apartments in Ashgabat are very expensive and, according to the official exchange rate, cost from $223 thousand to $376 thousand, and the price per square meter averages $2950.

However, housing in Turkmenistan is acquired with a mortgage loan at a rate of up to 1% per annum. At the same time, a loan for the purchase of apartments is issued for 30 years, but the first installment (10% of the amount) must be paid immediately.

In some ministries and agencies, when employees acquire apartments in houses with an improved layout and with all the household appliances and furniture necessary for a comfortable life, no advance payment is charged at all. In addition, when repaying the mortgage, a five-year grace period is provided, during which only the interest on the loan is paid.

Nur-Sultan

According to data from analytical centers in Kazakhstan, the average cost of one square meter of primary housing in Nur-Sultan is about $900. Over the past year, an increase in housing costs in the city of about 10% has been recorded.

In Kazakhstan, since 2018, housing purchase-and-sale transactions have increased at a rapid pace. This was linked to government mortgage programs. The mortgage rate under these programs was set at the level of the base rate of the National Bank of Kazakhstan (currently - 9.5% per annum).

The share of preferential programs in the total mortgage portfolio grew from 2018 to May of this year to almost 30%. However, in early May of this year these programs were closed, as a result of which in one month demand for housing in Nur-Sultan fell by 17%, and in Almaty – by 23%. 

The authorities planned to open new similar programs, but so far this has not happened.

The mortgage rates of private credit organizations currently average 15% per annum.

Moscow

The average price of one square meter of housing in Moscow, according to the Kalinka Group analytical center,  in the first half of this year  rose to $5274. This is almost 30% more than in the same period of 2020.

Specialists attribute the sharp rise in housing in the Russian capital to the launch of the state preferential mortgage program in the spring of last year at the height of the lockdown. Mortgage rates under this program were no more than 6.5%, and the loan amount in Moscow – 12 million rubles ($165,000).

The growth of housing prices in Moscow slowed sharply due to a drop in demand at the beginning of the second half of the year, when the maximum loan amount under this program was reduced by 4 times – to 3 million rubles. Analysts believe that reducing the loan amount effectively means winding down the state program, since apartments at such a cost simply do not exist in Moscow.

Thus, an apartment under the preferential mortgage can now be bought only in the regions. Mortgage loan rates in Russian banks are 8-10%.

Source: Asia-Plus