The property analysts from Yekaterinburg and Sverdlovsk Region have noted a significant spike in mortgages taken out to buy property outside Yekaterinburg city centre. Whereas at the start of the year 2011 the proportion of mortgages for city apartments and suburban properties was 83% to 17%, by now the balance has shifted to 30% for city apartments and 70% for suburban houses.

Most likely, the reason for such dramatic change is a buoyant suburban property development that has centred upon building low-rise houses, and a somewhat aggressive advertising thereof in the local media.

This increase in demand seemingly ignores the fact that only 5% of banks in Sverdlovsk region consider land a liquid asset and thus offer mortgages to either buy a house or a piece of land. The minimum of initial payment has to be 30% off the total sum, while the minimal mortgage rate is about 8.5%, provided all types of insurance have been included. If the property is uninsured, the mortgage rate rises to over 11%. Whenever possible, banks also attempt to offer the properties best suited for a resale, should mortgage terms be compromised. These include properties within the easy reach from the city centre, with a full document pack for land ownership and construction, and established utilities connections.

According to June 2011 data, to buy a fully built suburban house in Sverdlovsk Region cost 8.5mln RUR, while a semi-built house cost 5.7mln RUR. The favourite areas are Serovsky and Chelyabinsky Tracts and the vicinity of Yekaterinburg. In the case of Serovsky and Chelyabinsky Tracts, future house owners are attracted to waterside properties. People are also more eagerly buying concrete houses, than brick houses, due to the latter's more expensive price.

The analysts predict that this increase in demand for suburban property is likely to dictate the more favourable terms of mortgages in the region.

Source: Infox.ru, DPBond.ru. Image courtesy of DPBond.