Kazakhstan’s mortgage market recovers despite reduced role of government programs
Kazakhstan’s mortgage market is showing signs of recovery. In the first seven months of 2024, the volume of new mortgage loans increased by 16% to $2 billion. This recovery is largely driven by the expansion of commercial bank programs, which saw a 62% increase due to process automation and partnerships with developers. Meanwhile, new housing prices fell by 1.2% and secondary housing prices rose by 3.5%, according to the Association of Financiers of Kazakhstan (AFK).
The share of market-based programs in the total volume of new mortgage loans rose to 35%, the highest level in seven years. Leading the growth in mortgage portfolios are Bank CenterCredit (+15%), Halyk Bank (+12%) and Freedom Bank (+8%). In comparison, Otbasy Bank saw a slight decline (-0.1%) due to the conversion of interim loans into housing loans.
Despite the increase in market activity, mortgage payments remained stable, averaging 35% of salaries — well below the 50% cap that defines an unsustainable debt burden. Additionally, nominal salaries increased by 10.3%. The rental market is also showing signs of stabilization, contributing to the overall balance in the real estate market.
Experts have observed a reduced role of benefit programs, even with the introduction of new state initiatives like Nauryz and Otau. However, state support remains crucial for low-income individuals. The Association of Financiers of Kazakhstan (AFK) attributed the diminished role of state programs to budget constraints. Looking ahead, the government plans to limit state support to prevent market overheating and maintain housing affordability.
«Withdrawals from the Unified Accumulative Pension Fund (UAPF) are exerting upward pressure on the market, driving high levels of buying and selling activity. Some of this activity may be a way to convert pension savings into ‘real money’ rather than genuinely improving housing conditions,» analysts suggested.
Experts stress the need to address inequality in the tax code by offering tax deductions for individual income tax on all mortgage loans for first-time home purchases, not just on preferential loans from Otbasy Bank, regardless of the borrower’s existing property holdings. AFK experts believe that allowing banks access to a broader housing savings system would enable depositors to choose where to keep their savings. This, they argue, would increase competition for clients and provide incentives for better pricing and non-price terms on loans.
