Housing Affordability: the Effects of the State Housing Assistance Policy for Mortgage Borrowers

This study examines the effects of Russia's state housing assistance policy, specifically the preferential mortgage subsidy program, on housing affordability. Implemented in response to the COVID-19 pandemic, this program aimed to reduce mortgage rates to around 6.5%, stimulating the housing market. However, the analysis reveals a paradox: while the program increased homeownership by making mortgages more accessible, it also led to significant price inflation in the primary housing market. This inflation reduced overall housing affordability, especially in urban areas with high demand. The study utilises a mixed-methods approach, incorporating quantitative data from 2000 to 2024 and qualitative case studies. The findings indicate that while the program boosted short-term affordability, it contributed to long-term price increases and potential market instability. Policymakers must balance such interventions with supply-side measures to ensure sustainable housing affordability.