The housing price index (HPI) declined by 0.74 percent over the last month and became 1.00, as shown in Mongol Bank’s July report on real estate.
Compared to July 2016, the HPI plunged by 1.2 percent, the report stated.
An independent study conducted by Tenkhleg Zuuch Real Estate Agency on Mongol Bank’s order assessed prices of 4,918 properties available in Ulaanbaatar. Experts assessed that low values of new and old properties put on sale in July impacted on the HPI drop.
Housing prices have been steadily falling since last year. The Mongolian real estate sector was able to slightly recover in June after recording a 4.7 percent decrease in housing prices in May but now, it has plunged once again.
The cost of real estate hit a record 23.7 percent increase in March 2014, and since then, it has steadily dropped.
The HPI data showed that the average cost per square meter for a new apartment increased by 0.56 percent compared to the first quarter of 2016, amounting to 2.022 million MNT. This is an increase of 0.71 percent compared to the average cost per square meter in June 2017.
The HPI for new apartments was 1.14.
Properties in Khan-Uul District are the most expensive in the capital, costing an average 2.69 million MNT per square meter, while properties in Songinokhairkhan District are cheapest, averaging 1.55 million MNT per square meter.
The HPI for older properties was 0.92 as of July 31, which is 0.5 percent lower than last month and 6.16 percent lower than July 2016.
The average price for a two-room apartment was slightly over 72 million MNT.
Older two-room apartments are most expensive in Sukhbaatar District, costing 88.1million MNT on average, and prices are lowest in Songinokhairkhan District, averaging 55.1 million MNT.
With deflating real estate prices, people are growing more interested in mortgage loans. However, there have been considerable number of complaints about slow mortgage loan processing.
When asked about this, a spokesperson for Mongol Bank said, “Commercial banks issue mortgage loans after assessing the potential risk. Hence, Mongol Bank has no authority to get involved in this matter. However, Mongol Bank can set new regulations for mortgage loan issuance.”
Currently, commercial banks in Mongolia give mortgage loans worth 25 to 30 billion MNT a month. This is said to be sufficient for housing around 700 families.