“Increased demand led to a decrease in housing affordability in recent years” – Central Bank

At the end of 2023, the gap in the growth rate of nominal income and prices for residential real estate widened to 20%, the Central Bank reported.

Last year, the number of real estate purchase and sale transactions increased by 4.4% – to 335 thousand units. In October-December, activity in the housing market slowed by 10% compared to the third quarter – to 83.2 thousand transactions.

“Activity in 2023 was mainly supported by high demand in conditions of the attractiveness of the real estate market in comparison with other investment and savings instruments. High demand is also facilitated by the demand for mortgage lending among the population, which accelerated noticeably in October-November,” the published document reads.

In the primary real estate market, prices over the year increased by 39.6% (in dollar terms – by 26.9%), in the secondary market – by 35.1% (in dollar terms – by 23%). In Tashkent, Tashkent, Andijan, Bukhara and Khorezm regions, real estate prices increased by 40%, which was facilitated by “accelerating infrastructural development”.

In 2023, rental prices in national currency increased by 8.8%, and in dollar terms decreased by 1%. Rental housing values stabilized in the fourth quarter thanks to strong supply and slowing demand.

Rent prices increased the most in Fergana (21.1%), Bukhara (16.5%) and Tashkent (17.6%) regions. In other regions of the republic, prices increased by an average of 5-7%, while in Tashkent they decreased by more than 9%.

“In 2023, the growth gap between nominal incomes and house prices widened to 20%, up from 4.4% in 2022. On the contrary, due to the stabilization of rental prices, the difference between the growth of income and rent became negative (-5.2%),” the Central Bank noted.

In the report, the regulator emphasizes that the cyclically interrelated increased demand against the background of attractive profitability and rising prices lead to a certain decrease in housing affordability in recent years.

At the beginning of January, the Central Bank took the initiative to tighten the requirements for issuing mortgage and car loans to the population. The regulator also proposes to introduce new indicators for assessing the credit risk of borrowers.