THE INFLUENCE OF GROWING HOME OWNERSHIP COSTS ON ADULT LIVES

Introduction. Rising property prices not only exacerbate the existing housing crisis, but also add a new dimension to socio-economic inequality, casting a shadow on the daily experiences and well-being of countless people. According to the most recent "UK Public Opinion and Social Trends" bulletin, between June 28, 2023, and July 9, 2023, about 92% of adults thought that the cost of living was a significant problem for the UK (Office for National Statistics, 2023). The Bureau of National Statistics reports that in Kazakhstan in June 2023, the cost of new apartments had risen by 14.9%, while the cost of pleasant housing for resale had increased by 8.1% from the same period in 2022(The Bureau of National Statistics,(2024,February 9) I picked this problem since my family includes bankers and economists, which gives me the opportunity to learn more about it. At dinner, when the whole family gathers, topics about mortgage programs are often discussed. In my opinion, price increases will have a negative impact on the economic condition and mental health of adults in the country.

Inflation- rapid rises of prices. A mortgage is an interest-bearing loan (debt) from a bank and the guarantee to repay the money is collateralized by property - a house, apartment or land.

Context. The impact of rising home ownership costs on adults' lives is a multifaceted issue that affects individuals in different ways. 'One of the factors that has a significant impact on price increases in the real estate sector is general inflation. Even in developed countries such as Canada, the US, Western Europe and Germany, there has been no price increase for the last 20 years, whereas in the last two years, real estate prices have increased by 9-11% annually’ explained Ibragimova Lassat ( Ibragimova Lassat, 2022). People with debt repayment problems also have much worse psychological health, both subjectively and objectively. The results showed a significant causal relationship between debt problem and psychological health. (Gathergood, 2011). According to the 2018 National Financial Capability Survey (NFCS), 35% of American families have a mortgage, 37% have credit card debt and 26% have student loans (FINRA IEF, 2019). Consumers are concerned about personal finances and express financial anxiety, stress and distress: In 2018, 53% of respondents said they sometimes felt anxious when thinking about their personal finances and 44% said they sometimes felt their heart racing or stressed when discussing their finances (FINRA IEF, 2019)(Xiao & Kim, 2021). This suggests that rising real estate prices have a negative impact on the psychological health of adults.

Rising house prices are leading to a decline in living standards for many individuals, as the cost of homeownership becomes increasingly unattainable. Price growth in the primary market in the first half of this year has already increased (+10.0%). This is higher than the rate of price growth for the whole of last year (+4.8%). In the secondary market, the rate of price growth (+17.2%) exceeded the annual growth rate projected for 2020 (+13.9%). According to the UK Survey, adults who rent a home are more likely than those with a mortgage to have underpaid for food in the last two weeks (14% compared to 3%), to have not paid their gas or electricity bill (13% compared to 4%), to have direct debits or standing orders that they have failed to pay in the last month (19% compared to 4%), and to say they are spending less on food and essentials (58% of those who rent compared to 48% of those with a mortgage), receive support from charitable organizations (8% compared to 1%) (Office for National Statistics, 2023). As a result, increasing property values could potentially create challenges for adults in their day-to-day routines.

Despite this, the increase in property price growth has its advantage in the role of the country's economy and on mentality of citizens. The volume of overdue mortgage loans in 2022 amounted to only 36 billion tenge - 26.4% less than a year earlier. The share of overdue loans in the mortgage portfolio fell to 0.9% versus 1.7% a year earlier. For example, in 2014 this value was more than 10%,” the CEO of Kusto Home cited data from the National Bank (Serikpaev, 2022). Moreover, this means that rising prices affect the nervous state of citizens and leads to a deterioration in mental health. Therefore Higher house prices can have a positive effect on individuals' financial responsibilities and contribute to the economic growth of a country.

Aim section

The main goal of this project is to study these reasons in more detail and identify the impact of rising real estate prices and identify the social, economic and mental consequences in the lives of adults. The ultimate goal is to identify potential opportunities, to identify finance concept solutions that prioritize housing stability and thus contribute to an improved quality of life for adults. Through this project, through various studies and input from experts in the financial and real estate sectors, I hope to identify the causes and consequences of rising house prices and find solutions to address these problems. Hypothesis: Most often people prefer to live in rented houses because having less knowledge about various mortgage programs

1. How rising homeownership costs affect adults' finances?

2. What impact can rising housing costs have on the decision of a adult’s future?

3. What way is beneficial for buying a house?

4. How do mortgage programs facilitate the process of purchasing a home for citizens?

Methods

For this research the governmental website were used due to it’s reliability. For example, data from a survey in the UK, state satya. The information showcases a level of expertise in understanding the intricacies of different housing programs provided by Otbasy Bank. The author appears knowledgeable about mortgage options, down payments, and interest rates associated with each program. It is clear that the person is an expert in the field of finance. The aim of my research is identify the reasons and consequences of rising prices and their effect on adults and to find the best way to buy a immovables.

For the primary research I use the interview method to collect qualitative information. The advantage of collecting information through an interview is in-depth understanding. Interviewing allows to probe deeper into the candidate by asking additional questions and clarifying information. In my primary research I intend to interview bank employees. Some questions are presented below.

This methodology has been chosen (a survey as a quantitative data)due to reaching a large number of people  in a small amount of time. This is because surveys give us access to the views of a large number of people and because they are anonymous, giving us a better chance of getting honest opinions to identify a more issue and resolution. By collecting a large amount of information from a large number of people, statistical analysis can be done and general conclusions can be drawn. Respondents may also feel more comfortable answering questions openly in an anonymous survey, which can lead to more honest responses. I would also like to know the financial situation of citizens after their home purchase and whether they have any savings. Also, has inflation in the real estate sector had any impact on the social sphere of citizens. I believe that the argument about the deterioration of the social sphere in the lives of citizens will be confirmed by a survey.

Result section

According to the results of a survey on the topic “the impact of rising real estate prices on the lives of adults,” many believe that rising housing prices will affect the lives of adults. A wide range of age groups participated in the study; 43.1% of respondents were between the ages of 16 and 21, followed by 25.5% of respondents who were over 40(pic. 4). 51% of respondents are female and 49% are male(pic.5).

RQ1: How rising homeownership costs affect adults' finances?

In response to this question, 26 out of 51 participants, or 56.9%, indicated that growing housing expenses have an impact on people's overall quality of life. Out of 51 respondents, or 23.5% of the total selected the option that the quality of life is somewhat impacted by inflation in the real estate sector. Thirteen percent, or seven persons, responded that it had no effect on life quality 5.9% of the respondents said they were unsure of their response (pic.1). Depending on the responses to the query, "Do you have the chance to save money?" The majority of respondents 33.3% of the total—answered that they do not have the chance to save money. Then, 13 out of 51 respondents of the total, said that they are in possession of such a chance. Thirteen respondents indicated that they could postpone in part. 8 respondents indicated that a few different things affect their ability to save money (pic. 2). According to 25.5% of respondents, the increase in housing costs has a half-effect on their lives. Of those surveyed, 21.6% said they had no dependence on the real estate market. Nevertheless, 13.7% of respondents said they were wholly reliant on the real estate industry (pic. 3).

RQ2: What impact can rise housing costs have on the decision of a adult’s future?

Based on the results, the open-ended question “how do you think the current trend of rising real estate prices might affect the lives of adults in the near future?” The largest number, 19 out of 51 respondents, answered that they unsure of their answer. Ten participants said that although prices will grow, salaries will stay the same, casting them in a difficult circumstance. According 9 respondents answer the country's economy will benefit from growing real estate prices. The remaining 8 respondents gave the following answers: "The environment will worsen," "The economy, on the other hand, will worsen," and "The people will become poorer and property owners will get richer."(pic. 8-14)

RQ3: What way is beneficial for buying a house?

According to an interview conducted with Sandugash Bakeshova, a bank specialist at Sber Bank 17 years, it is recommended that home purchases be made through certain mortgage programs. "If you take it as a consumer, then the mortgage should be 18-17%, that is, it will always be lower," she says, yet the interest rate is between 23 and 25 percent. She believes that using mortgage programs to purchase an apartment will be less expensive than buying a house through any other means.

RQ4: How do mortgage programs facilitate the process of purchasing a home for citizens?

The findings of the interviews indicate that mortgage programs make it simpler to buy a home without worrying about making excessive payments. "The total overpayment will be around 30% of the amount that he borrowed from the bank if the client saves 50%. Viewed through the lens of a consumer, interest rates range from 20 to 23 percent, with mortgage rates often falling between 18 and 17 percent. Mortgage programs, like those offered by Otbasy Bank, make buying a home easier for citizens. These programs provide options with lower interest rates, such as the "9-20-25" and "Zhetisu Zhastary" programs, which are beneficial, especially for those who can't afford to pay the full price upfront. Overall, these programs help individuals achieve their goal of homeownership by offering more accessible financing options.

Discussion section

Office for National Statistics, 2023, The website that I use for second argument has a great reputation because it is a government website. Also, the website posts a number of articles containing statistics from the UK. The page includes comprehensive information and illustrations showing how to view and create graphs. The author seems to have access to trustworthy UK sources. This primary research is multi-authored by Lili Chowdhury, Caleb Ogwuru, Chris Jones, David Ainslie and Tim Vizard. Lili Chowdhury, Jatiya Party (Ershad) politician and former Member of Parliament of Bangladesh from a reserved seat. Caleb Ogwuru, Senior Statistical Officer at the Office for National Statistics. Because the authors are experts in this field, the information on the web site is reliable. The argument presents a compelling case that rising house prices are indeed impacting living standards negatively for many individuals. The argument persuasively uses survey data and statistical evidence to back up its assertion that growing housing costs are having a detrimental influence on living standards. Nonetheless, the case would be strengthened if any confounding variables were acknowledged, and the causal pathways were investigated further. Even if 50 responses may seem insignificant, the survey can still give us good information if it is conducted correctly. Next time, I need to prepare the questions in more detail. We need to make sure that the people who responded represent the group we want to know about. Using effective questions and a thorough analysis of the data will also help to ensure the reliability of the survey. However, in the open questions there were arbitrary answers like "aaaaaaaaaaa" and ".......". In addition, comparing what we have found with the results of other studies can make us more confident in our results. So if we do everything carefully, even a survey with 50 responses can tell us a lot about how rising home ownership costs affect people.

Before the project, I thought that inflation in the real estate industry could only have a negative effect and only take into account one side of the debate. However, after conducting a survey and looking up different sources online for opposing viewpoints, I discovered that rising costs can also have positive effects, such as encouraging individuals in the real estate industry to become more responsible with their mortgage payments.  Although there were 50 responses, the answers were from teenagers between the ages of 16 and 21, which may have had an impact on the quality of the responses because of the lack of in-depth experience in the topic.  Teens were the primary age group I considered for the study because they had more friends in this age range. Since I only interviewed one banker, the answers might not represent all perspectives accurately. It was also hard to ask questions that would give a complete picture because I didn't have different viewpoints to compare. So, the results might be a bit biased and not as detailed as I wanted them to be. Next time, it would be good to interview more people from different backgrounds to get a better understanding of the topic. It will be essential to interview additional bankers and realtors and distribute the poll more broadly in the future.

Conclusion. Based on primary and secondary resources, the rise in housing prices has affected the lives of adults in Kazakhstan. The findings reveal a significant concern among participants regarding the impact of escalating housing expenses on overall quality of life, with over half of respondents expressing this sentiment. Furthermore, a notable portion of respondents lacks the opportunity to save money, underscoring potential financial challenges within the surveyed population. The varying degrees of dependency on the real estate industry suggest diverse economic circumstances among participants, highlighting the multifaceted nature of their financial realities. The responses to the open-ended question reveal a mix of uncertainty and concern regarding the future implications of rising real estate prices. A significant proportion of participants expressed uncertainty about the potential impact, while others highlighted potential challenges such as stagnant salaries amidst growing prices or environmental and economic concerns. Conversely, a minority view suggests optimism, anticipating potential economic benefits from the trend. Sandugash Bakeshova, a bank specialist at Sber Bank, advises potential homebuyers to consider specific mortgage programs due to their potentially lower interest rates, suggesting rates around 18-17% compared to the current 23-25% range. She emphasizes that utilizing mortgage programs for apartment purchases could offer a more cost-effective option compared to other methods of acquiring housing. The interviews suggest that mortgage programs offer a streamlined approach to homebuying, alleviating concerns about steep payments, with potential total overpayments estimated at around 30% of the borrowed amount for clients who save 50%. Interest rates for consumers typically range from 20 to 23 percent, with mortgage rates often lower, falling within the 18 to 17 percent range.