Central Bank: Home prices in Uzbekistan 17% above true value

In 2024, housing prices in Uzbekistan did not see a sharp increase; however, market prices are still 17% higher than their fundamental value. Last year, the annual growth rate of housing prices was 18.2%, though this is 14.2 percentage points lower than in 2023.

Analysts attribute the price stabilization to stricter mortgage lending conditions and the gradual alignment of housing prices with actual household income, which led to reduced demand.

Throughout the year, mortgage loans became more expensive, with higher interest rates and shorter repayment terms. These changes increased the cost of servicing mortgages, raising monthly payments and reducing people’s ability to purchase homes on credit.

While the average salary rose by 17.8% during the year, average mortgage payments surged by 44%. As a result, the purchasing power for housing declined by 27%.

Drop in home purchases

In 2024, a total of 329,000 homes were sold across the country – 2.2% fewer than in 2023. The decline is largely attributed to restrictions on mortgage lending and a partial market correction in housing prices.

At the end of 2023, Uzbekistan had approximately 7.5 million residential units, equating to one home for every five people.

As of January 1, 2025, mortgages account for 13% of total loans in the banking sector. According to the Central Bank, this share does not pose a major risk to the financial system.

Current state of mortgage lending

In 2024, mortgage loans issued to the population totaled 17.1 trillion UZS, with 92% of that amount used for purchasing homes. A total of 58,900 mortgage loans were issued throughout the year, marking a 14% decrease from 2023.

The Central Bank also noted a slowdown in the growth rate of mortgage borrowers among the working-age population. By the end of 2024, there were 18 mortgage borrowers per 1,000 permanent working-age residents – an increase of 7% compared to 2023. However, the rate of increase was 4 percentage points lower than the previous year.

The average size of a mortgage loan issued in 2024 was 291 million UZS – an 18% rise from 2023. This growth is attributed to higher housing prices influencing the average loan amount.

The Central Bank noted that banks have slightly tightened mortgage lending standards. In 2024, the average maturity term for newly issued mortgages decreased by 0.8 years to 16.6 years.

According to estimates, the average interest rate on mortgage loans in 2024 rose by 0.5 percentage points to 19.8%.

The regulator explained that stricter lending standards have a dual effect: on one hand, they reduce the public’s ability to obtain housing; on the other, they lower the risk for banks by reducing the likelihood of loan defaults.