World Bank Calls for Housing Finance Reforms to Boost Homeownership in Kazakhstan

A World Bank Group and IFC report finds that despite significant public spending and rapid mortgage market growth, housing remains unaffordable for most Kazakh families due to high prices, costly loans, and inefficient subsidy programs. It calls for better-targeted housing support, stronger private-sector participation, and capital-market reforms to expand homeownership while reducing long-term fiscal burdens.

A new report by the World Bank Group and the International Finance Corporation (IFC) argues that Kazakhstan's housing challenge is not simply about building more homes. Instead, the country needs a more effective housing finance system that helps ordinary families buy homes while reducing pressure on public finances.

The study, Homes and Hopes: Mobilizing Private Capital for Affordable Housing and Family Investment in Kazakhstan, was prepared by researchers and housing finance experts from the World Bank Group and IFC. It examines how Kazakhstan can improve housing affordability, attract private investment, and create a more sustainable mortgage market as it works toward becoming a high-income economy.

Why Homeownership Remains Out of Reach

Kazakhstan has one of the world's highest homeownership rates, but many households still struggle to access quality housing. Rising property prices, high inflation, and expensive mortgage rates have made it increasingly difficult for young families and first-time buyers to enter the housing market.

Although around 200,000 new housing units are built every year, demand remains strong, particularly in major cities such as Almaty and Astana. The report estimates that only about 20 percent of households can realistically afford a home using current mortgage products. This means a large share of middle-income families remain excluded from homeownership despite government support programs.

The issue matters because housing is often a family's largest asset. Limited access to affordable housing can widen wealth gaps, delay family formation, and reduce economic opportunities.

The Growing Role of the State

The report highlights the dominant role of Otbasy Bank, the state-backed housing lender that accounts for roughly 60 percent of new mortgage loans. Through subsidized savings and lending programs, the bank has helped many families purchase homes.

However, researchers warn that heavy reliance on one public institution may slow the development of a competitive mortgage market. Commercial banks often struggle to compete with subsidized products, limiting innovation and reducing private-sector participation.

For policymakers, this raises an important concern. If housing finance depends too heavily on government support, the state may face growing financial risks while private investors remain on the sidelines.

Making Subsidies Work Better

One of the report's key findings is that Kazakhstan already spends significant public resources on housing support. The challenge is ensuring that the money reaches households that need it most.

Many current programs are not well targeted and sometimes benefit higher-income borrowers who could obtain loans without government assistance. The authors argue that public support should focus more on helping lower- and middle-income households, particularly through down-payment assistance rather than broad interest-rate subsidies.

This approach could improve affordability while allowing public funds to support a larger number of families. Better targeting would also help governments achieve stronger social outcomes without increasing spending.

Bringing Private Capital into Housing Finance

The report calls for greater private-sector participation in the housing market. Kazakhstan currently lacks several financial tools commonly used in advanced mortgage markets, including mortgage-backed securities, covered bonds, mortgage insurance, and guarantee programs.

Developing these instruments could attract long-term private investment, provide banks with new funding sources, and expand mortgage access for lower-income borrowers. Mortgage insurance and guarantee schemes could also help families who lack large down payments qualify for loans.

For policymakers, the message is clear: public funds should be used to attract private capital rather than replace it.

A Roadmap for Smarter Housing Policy

The report concludes that Kazakhstan has the foundations needed to build a stronger housing finance system, including a stable banking sector and substantial public support. However, future reforms should focus on improving affordability, strengthening governance, developing capital-market funding, and making subsidies more effective.

If these changes are implemented, researchers estimate that housing affordability could improve enough to benefit an additional 10 to 20 percent of households. More importantly, the reforms could help create a housing market that supports economic growth, reduces fiscal pressures, and gives more families a realistic path to homeownership.

For Kazakhstan, the future of housing policy is not just about constructing new homes. It is about creating a financial system that allows more people to afford them.