Housing cooperatives tighten internal lending conditions: what is happening in the Baku real estate market?

Recently, some housing and construction cooperatives (HCC) have significantly changed the terms of internal lending for apartment buyers. If previously loans were provided for up to five years, now this period has been reduced to 24-36 months, while interest rates have increased substantially.

According to economist Rashad Hasanov, this situation in the real estate market is due to a number of factors. In particular, there is a decrease in supply caused by delays in the development of the General Plan for the city of Baku, tightening of construction criteria, and slowdown in the implementation of pilot projects. Additionally, in the second quarter of 2024, the terms for mortgage loans issued by commercial banks became stricter, and interest rates reached 12%.

"As alternative conditions worsen, the market may tighten its internal conditions," he emphasizes.

Another factor affecting the situation is the increase in funds attracted by construction companies. In addition, the practice of unofficial sales, which was widespread earlier, is now limited, and the procedure is being legalized. This creates additional expenses, which also affect the process.

R. Hasanov emphasizes that in the medium and long term, the ability to forecast business, especially in the construction sector, is limited, which creates a challenge in the direction of implementing funds in shorter timeframes.

"Business is responding adequately to these changes," he adds.

The economist notes that against the background of the mentioned processes, there is a further deterioration in the conditions offered by companies and a decrease in housing affordability for the population.

More details in the video report prepared by Xəzər Xəbər: