“There hasn't been such a terrible story for a long time,” economist calls huge problem in Russia

“There hasn't been such a terrible story for a long time,” economist Alina Kurlovich called a huge problem in Russia

The Russian real estate market is in crisis. The impoverished population is not buying housing, and developers cannot pay off the loans they took out for construction. There is a huge amount of built housing on the real estate market that cannot be sold.

Doctor of Economics Igor Liptsis said on Channel 24 that Russians' mortgage debt amounts to 57 trillion rubles, while Russia's budget fluctuates between 40 and 45 trillion. The crisis in the real estate market has led to an increase in prices for everything, while salaries remain unchanged. The increase in salaries affected only those involved in the war with Ukraine. As a result, Russians can no longer afford to buy housing.

Why the Russian real estate market is on the verge of collapse

There are about 70 million square meters of housing in Russia, and all of it was built with loans taken out from banks. Developers hoped that they would sell apartments for several years and return the money to the bank. But sales have stopped, explained Igor Liptsis.

There is a threat of mass bankruptcy of developers. In this regard, Russia plans to introduce a moratorium on mass bankruptcies of developers. If this happens, banks will not be able to collect mortgages or confiscate property, since the state has imposed a ban.

What will happen to the banks? They will go bankrupt. Depositors' savings will be lost. They may get a million rubles each, but if someone had more, they will get nothing, the economist added.

Igor Liptsis also noted that there are optimists who believe that a catastrophe will not happen. Others predict a threefold drop in real estate prices. However, there is no precise forecast for how this situation will end, since, as Liptsis noted, “there hasn't been such a terrible story in Russia for a long time.”