Happiness in meters
In the first month of 2025, Kazakhstanis withdrew about 80 billion tenge from their pensions for housing and medical treatment. In January, the total amount of approved applications for improving housing conditions amounted to 48.4 billion tenge, with the number of requests reaching 58.9 thousand. Compared to December, these figures have dropped by about a third, but it seems that the withdrawal boom, which has been ongoing for more than six months, shows no signs of stopping. The context of this recent activity may have been the discussion launched in the summer about introducing restrictions on withdrawals in the future, which was followed by other proposals for changes in the pension system. Analysts from AERC (Applied Economic Research Center) analyzed housing prices in 2024 based on data from the National Statistics Bureau and the website Krisha.kz. According to official data, the average cost of one square meter of new housing in Kazakhstan in December was 500,198 tenge. In December, prices for new housing increased by 0.2% (m/m), and compared to December 2023, the growth was 3.0%. Astana is the region with the highest average price per square meter at 595,466 tenge. The least expensive region is Aktobe, where the average cost of one square meter in new buildings is 286,063 tenge. The average price per square meter of new housing, according to Krisha.kz listings on December 27, was 454,782 tenge nationwide. The highest price growth for new housing was observed in the
“The changes are aimed at increasing the accessibility of tax benefits for a wide range of borrowers, which in the long term may contribute to stimulating mortgage lending and supporting the housing market,” notes Yerasyl Serikbay, senior analyst of the consulting services department at AERC.
Growth factors
Advisor to the President of the Self-Regulatory Association of Realtors of Kazakhstan Nina Lukyanenko assesses the real estate market last year as stagnant.
“Yes, overall the year showed a general increase in the number of transactions by 17% compared to 2023, but it has not returned to the levels of 2022 - a decrease in the number of transactions by 7%. As for the prices per square meter, within the year, the monthly indicators of the index of growth/decrease in prices for new housing ranged from minus 0.4% per month (March) to a maximum increase of 1.6% (April). The secondary real estate changed within the same price range - from minus 1.2% to plus 1.8%.”, - notes the expert.
She notes that customers have become more demanding regarding the quality of construction, infrastructure, and layouts.
“Leading construction companies are setting the trend for future projects – a bigwille format has emerged (‘city within a city’ with its own social and commercial infrastructure, public spaces, residential quarters), and in the elite segment, projects with an increased level of comfort have appeared, for example, options where the complex includes apartment-class premises, where you can accommodate your guests. As for new residential complexes, the direction of city development will be determined by the akims. In Almaty, housing below class III will no longer be built. This was stated by the city akim Yerbolat Dosaev. This means that the requirements for new designed projects are clear.”, - continues the interlocutor of TAJ.report.
The cost of housing will continue to be influenced by inflation, the dollar exchange rate, urbanization, population growth, and prices for construction materials.
Nina Lukyanenko - Advisor to the President of the Self-Regulatory Association of Realtors of Kazakhstan
“And the main influencing factor is the economic policy of our country. Since the end of last year, tax reforms have been actively discussed. They will show their effect on all segments of the economy, including those not related to real estate. But concrete meters are a commodity. An expensive commodity, but just as much a commodity as bread, butter, milk, a dress, or boots. And if the reforms exert pressure, then prices will undoubtedly change,” says Nina Lukyanenko.
What kind of beast is this?
How exactly the reforms will be carried out is still a matter of speculation.
“If throughout 2024 the topic of canceling VAT for developers was discussed, and as a result, price increases due to this reason, recently a new wave of discussions has emerged - an infrastructure tax of $40-60 per square meter. So many years have passed since the dollarization, it is surprising to see some proposals. Why in dollars? Why per square meter, what kind of beast is this - an infrastructure tax? Year after year we answer questions about what needs to be done to increase the availability of housing, we talk about government assistance in bringing infrastructure to complexes to support developers and reduce costs, and we end up with such proposals,” - states the expert.
At the same time, the demand for housing is expected to remain high, believes the Advisor to the President of the Self-Regulating Association of Realtors of Kazakhstan.
“There is demand for apartments in any segment because having a roof over one's head is a basic human need. The population is growing both due to migration and high birth rates. How this demand will affect prices will depend on how much the demand is backed by purchasing power,” - notes Nina Lukyanenko.
We also asked her about the impact on the mortgage program market, including subsidized ones.
“Preferential lending programs at this stage are aimed at supporting certain groups of the population - those purchasing their first home, or groups of individuals who find it difficult to save independently. Preferential mortgages are launched by specific developers in collaboration with banks to ease the buyer's path to their own home. In 2025, we will continue to see such offers.” The share of preferential programs is small, covering only certain categories of the population, and therefore I cannot say that their impact on the market is noticeable,” - shares the opinion of an industry expert.
According to the laws of supply and demand
The CEO of AERC, Zhanibek Aigazin, notes: real estate is an investment product just like investments in the stock market or a bank deposit.
"Ah, so this product is also subject to the laws of supply and demand. The periodically emerging distortions in our market, in addition to the operation of the fundamental law of economics, are related to financial repression, when the government intervenes in the market and begins to disrupt the established market equilibrium in the 'demand price – supply price' line." "This was the case during the COVID-19 period, when the authorities created soft monetary conditions and a fiscal impulse by allowing the withdrawal of pension savings, leading to a boom in the housing market - prices increased by 40-60%. Naturally, this measure subsequently reflected on inflation with a lag.", - says the economist.
He reminds that housing prices do not directly "sit" in the measured inflation index, but are deferred in a chain through inter-industry links to food and non-food products.
“What are my expectations for the real estate market in 2025? - Considering that the annual inflation in Kazakhstan at the end of January 2025 was 8.9% (with the upward trend starting in November-December 2024), they are not very good. Inflation will be the main trigger this year. Pro-inflationary factors – both external and internal – will influence price changes upwards, including in the housing market,” - says Aigazin.
In the internal environment, the influencing factors, according to the economist, will be the continuation of the "Tariff for Investment" program and the release of fuel prices to free float.
“The second is more in the category of expectations that citizens will factor into the cost of housing. Additionally, the ongoing expenditure of budget funds through the state and quasi-state sector, supported by fiscal incentives, will play a role,” the analyst clarifies.
What Financial Repressions Lead To
The external environment will also affect the real estate market, where experts are also noting pro-inflationary factors.
“First of all, they come from the Russian side. We will still be influenced by two channels - foreign trade and the ruble. The first is through price increases, the second is through exchange rate shocks in the form of sanctions, cutting off sectors of the economy from external markets. In the Russian Federation, capital movement and access to external markets are prohibited, and any bad news hits the ruble, which affects the ruble-dollar pair through the exchange rate, and then the dollar-tenge through the cross rate. As a result, the depreciation of the ruble and tenge occurs directly. Secondly, Trump's rhetoric will have an impact. The combination of these factors will be reflected in the real estate sector, where sellers and buyers operate within a market paradigm”, - says the head of AERC.
The parties are looking at the volatility of the American currency, which triggers the exchange rate of the national currency, prices are rising, and as a result, based on the internal inflation background, all else being equal, the situation in the housing market is changing.
"As a stabilizer, state programs for preferential lending operate through two main channels - '7-20-25' and 'Otbasy Bank', which essentially serves as an institution of financial repression. This is state credit issued at a preferential rate, the share of which reached up to 90% of the total volume of issued mortgage loans. I would like to note that with the introduction of this institution into the market, banks lost the incentive for housing lending, although this is the main business of banks," - the economist continues.
Zhanibek Aigazin - General Director of AERC
To change the situation from 2023, banks are cooperating with construction companies. For example, Freedom launched a joint mortgage product with BI - for the first three years, the rate is lower than the market rate, after which the market rate applies.
"In addition to inflationary factors, the housing market will be pressured by the expected tax reform, which I consider poorly prepared. Together, all these components will contribute to the rise in housing prices. But whether there will be solvent demand from the population for such high prices, no one can tell you," - says the economist.
At the same time, the December surge in demand for housing, when after the jump in the dollar exchange rate, residents of megacities began to buy up square meters, is cited as an example of market asymmetry.
“In Almaty and Astana, there has been an increase in housing transactions. The tenge has depreciated - people rushed to buy apartments, although logically, they should have been buying dollars. On the other hand, this is rational behavior in the market under conditions of rising prices. However, this year, in the context of the aforementioned reasons, it cannot be said unequivocally that people will choose to buy housing. To some extent, I agree with market representatives that housing may become less affordable for Kazakhstanis,” - says Aigazin.
In search of balance
At the same time, the economist does not rule out the possibility of stabilizing housing prices. This could happen in the scenario of another government aid to the construction industry, as one of the main drivers of economic growth.
“Probably, they will launch a construction stimulation program again. But I am against such steps – similar measures have previously distorted prices. What will banks do in these conditions? - They will buy currency swaps and wait for the national currency to depreciate in order to sell dollars and earn a margin, or they will engage in overnight and repo operations, and will not focus on their core business - lending.”, - shares the opinion of the channel's interlocutor.
By the way, the economist does not expect a significant increase in the cost of square meters.
“Real disposable income of the population decreased in 2024, based on this, the population has no resources to purchase housing, unless the government intervenes again with its incentives. I think prices in the market will have to adjust to the socio-economic status quo, so I do not see a strong price increase - the factor of consumption of essential goods (food, clothing) will outweigh the factor of acquiring durable goods. Already, more than 50% of the consumption structure consists of food products, which is not good. There are no funds left for purchasing housing,” - states the economist.
Even the state program "7-20-25" and the Housing Construction Savings Bank do not fundamentally change the situation. The 100 billion tenge allocated for the program this year (as well as in 2024) is insufficient, and not everyone can save under the housing construction savings system, notes Aigazin.
“So prices will be frozen, or they will not rise significantly,” he believes.
We asked him about how to find a balance between preventing the state from inflating the housing bubble and allowing the population to acquire a roof over their heads without onerous conditions.
“The question, at first glance, seems simple, but in reality – it is not. In economics, it is always like this: one question - fifteen opinions, even if there are only two economists present. In search of balance, countries have followed similar paths. Spain, the USA with their construction, housing crises, and failures in the mortgage market. In America, the government provided cheap market liquidity through low Federal Reserve rates plus the suspension of scoring, allowing multiple mortgage loans to be issued even to unemployed individuals with poor credit histories. The authorities were confident that housing prices would rise, but the market collapsed due to a classic bubble. And the government had to inject money. Japan went through the same thing in the early 1990s,” - says the economist.
In Kazakhstan, the financial infrastructure is not as developed, he notes, plus there is high inflation.
“The price of money in a market economy is determined by inflation. If inflation is low, there will be mortgages at 3-4%. At 2% - I don’t know, probably for that you need zero inflation, but that’s bad, as evidenced by the example of Japan, which could not cope with deflation for 20 years, which is why this time was called the lost decades. Developing countries are saved through preferential mortgage conditions. In developed countries, preferential mortgages are only possible for socially vulnerable groups, the middle class receives market rates and does not complain. However, in our case, representatives of the middle class and above have such an opportunity, and this is a bad practice”, - says the expert.
At the same time, in the structure of loans, only a third is accounted for by mortgages, many Kazakhstanis cannot afford to buy even a microwave oven for cash, he adds.
A roof for everyone
The Director of the Applied Research Center "Talap" Askar Kysykov emphasized that currently, housing prices are under pressure primarily due to the weakened exchange rate of the tenge.
"The cost of construction largely depends on imports, and every depreciation of the national currency translates into an increase in housing prices. Compared to pre-COVID times, the cost of building materials has increased significantly and continues to rise. Wages, expenses, and taxes are also increasing, which contributes to the rising cost of construction. Although official statistics for the past year show that housing prices have only increased by 4%. The main increase occurred in December 2024 - January 2025. An additional factor in the rise of housing prices was the rumors among realtors and buyers about the introduction of VAT on housing purchases. Market participants urged to buy housing before the New Year. However, this measure was not included in the draft of the new Tax Code", - says the channel's interlocutor.
He, like his colleagues, pointed out that the possible cancellation of the VAT exemption on the sale of housing, which may increase from 12% to 20%, will lead to a significant increase in real estate prices. As will the infrastructure fee.
“On the other hand, there is a growing demand for housing, but mortgages remain inaccessible for Kazakhstanis. At the same time, there is a solvent demand from citizens purchasing housing in cash. This trend is related to urbanization - for example, last year 69 thousand Kazakhstanis moved to Astana. In addition to natural population growth, there is migration from the regions,” continues the economist.
Askar Kysykov - Director of the Applied Research Center "Talap"
It should be noted that the net outflow of the population from rural areas in Kazakhstan last year hit a record low in 25 years - the number of rural residents decreased by 14.6 thousand people compared to the previous year. Meanwhile, the urban population increased by 266.8 thousand people. The category of those who moved creates additional demand for housing in terms of purchasing and renting. The second aspect indirectly influences people to invest money in housing for subsequent rental, adds Kysykov.
“Demand is influenced by mortgage programs, but the level of mortgage penetration remains low compared to developed countries. Market mortgages are not accessible to many Kazakhstanis. There are preferential programs implemented through Otbasy Bank, but their number has decreased, and they are becoming less accessible. The budget for the '7-20-25' program is very limited, there are 'Nauryz' and 'Otau', but they have strict criteria (specific population categories, income restrictions), and few people qualify for them, and those who do cannot confirm their creditworthiness. There is a 'Green Mortgage', which is more market-oriented, and a women's mortgage 'Umai', but even considering these programs, the volume of mortgages in the housing market is small,” - says Askar Kysykov.
The economist sees the solution to the problem in launching an affordable market mortgage, so that any resident of the country with stable income can take a loan at 7-9% - this is the rate the economist considers adequate.
"At the current rates, reaching up to 25%, taking out a mortgage is extremely unprofitable – considering the overpayment, you are paying for one apartment the cost of two or three apartments. Unfortunately, there are no alternatives to a mortgage today. For a radical change in the situation, we need to wait for a decrease in the base rate. There was a time when it was 9%, and mortgages were issued at 12%, which was already bearable and manageable for many segments of the population. Now the base rate is extremely inflated, even taking inflation into account, and I am confident it has the potential for further reduction," - emphasizes the head of "TALAP".
Overall, he sees the need to reform preferential mortgage programs.
“First of all, it is necessary to reduce their number – there are too many of them, and people are already getting confused. A unified subsidy program should be developed, for example, a family program – for families without housing or planning to expand their living space. The second direction is mortgage for single Kazakhstanis, specialists who want to purchase their first home. Thus, working youth will have the opportunity to buy their first house at a preferential rate,” - says the economist.