Have Kazak Property Prices Peaked?

Predictions that house prices in Kazakstan will rise by a third as a result of a new construction law are unfounded, according to NBCentralAsia experts who believe prices have peaked already.



Since the beginning of March, construction industry businesses have been voicing concern that new regulations will increase their own costs and drive up prices by 30 per cent. They are worried about a new law requiring firms to show that they possess assets worth 12 per cent of any construction project they embark on.



NBCentralAsia experts are sceptical about these claims, arguing that the property market is already artificially inflated.



Analyst Maksim Kaznacheev estimates that the real value of housing in Almaty, the largest city in Kazakstan, is between 750 and 1,000 US dollars per square metre. Yet the market price is 3,000 to 3,500 dollars.



Kaznacheev doubts that the new law will lead to price rises. “This law won’t provoke price hikes, but it may be used as an excuse for doing so,” he said. “It is easier to make consumers bear the [financial] risks than to reduce current construction costs.”



In the view of political scientist Oleg Sidorov, “Prices have already reached their peak. As for a 30 per cent rise, it’s in the realm of fantasy. We can already see that supply far outstrips the demand for housing. If prices rose to that extent, the financial chain between banks, construction companies and estate agents would collapse.”



Sidorov views the construction firms’s campaign as a tactic to pressure the government’s supervisory agencies into relaxing the rules.



(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)