Use of Mortgage-Investment Analysis to Study the Behavior of the Population in the Residential Real Estate Market in the City of Kazan

Author Name(s): Nail M. Gabdullin*, Igor A. Kirshin, Linar G. Ibragimov
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The study considers the issues of making a decision on investing in residential real estate. The investment efficiency was assessed using and without using borrowed funds at different rates of rent growth. In the course of the mortgage market research, the preponderance of the offer of loans with an annuity repayment method was found.

The necessity of using discounting instead of capitalization in mortgage-investment analysis is substantiated. This is due to instability in the cash flows of owners. There may be cases of negative cash flows during the initial stages of investing in real estate with mortgage lending, which are covered by the net cash flow of subsequent stages. It is proved that the expectation by the population of a high level of inflation in the real estate rental market, which influences the price of real estate, facilitates the implementation of real estate transactions.

However, the investment evaluation model based on the capitalization formula does not allow this decision to explain, since it assumes the stability of cash flows in time.

Debt and equity are considered as sources of capital formation when investing. The practical importance of this study is represented by the analysis of the effectiveness of differentiated and annuity methods for repayment of a loan which are used by the leading subjects of mortgage lending: JSC Gazprombank and PJSC Sberbank.

In the course of the study, a detailed analysis of the dynamics of rental price growth and prices of real estate objects was made using the example of a one-room apartment for 2009-2017. On the basis of the analysis, the interrelation of price dynamics is revealed, the feature of which is the existence of an annual lag between the growth of rental prices and the growth of prices for residential real estate.


Residential real estate plays a significant role in ensuring the quality of life of the population and in some cases is also dominant in the definition of consumer behavior. The lack of opportunities to purchase real estate and / or its low quality significantly limits the opportunities for investing in human capital. The level of housing provision for Russians lags far behind the level of developed countries and is a significant limitation of the quality of economic growth.

At the same time, the attitude of the population towards their housing creates serious problems in the labor market. Russians are not ready to part with their homes and migrate to look for promising work, preferring to look for a job in a geographically close neighborhood. Moving is carried out as a last resort. For many Russians, housing is more important than a workplace.

Provision of housing for the population is possible in two areas: purchase and sale, and lease. Purchase and sale is possible at the expense of the buyer’s funds or at the expense of the buyer’s funds with the involvement of bank lending. It is necessary to improve all areas of financing transactions on purchase and sale of residential real estate in order to comply with the condition of the balance of the residential real estate market.

From a financial point of view, buying an apartment or a house is a significant investment for most citizens. Risks associated with the acquisition can create significant difficulties for a buyer. Potential losses are possible because of the complexity of the creation and functioning of real estate and the turnover of rights to it.


A potentially high level of profitability stimulates the population to view real estate investments as a way of saving, especially against the depreciation of the national currency. The growth of panic about the loss of purchasing power by the national currency led to an increased demand for goods, including real estate. This shows that the population is not inclined to trust the Russian currency because of high inflation and historical memory of the monetary policy of the 90s of last century.

Economic agents prefer to borrow, not save, taking into account the possible economic instability. As calculations show, the return on investment can reach up to 33%, this is 3-4 times higher than the yield of deposits. The choice of buying a property using mortgage lending is more preferable than placing resources on a deposit. This economic behavior leads to an imbalance in the financial system, creates serious restrictions on economic growth and increases investment risks.


The work is carried out according to the Russian Government Program of Competitive Growth of Kazan Federal University.


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