Anuar Abdrazakov | 15.10.2025
Market Bubbles in Kazakhstan
Since gaining independence in 1991, the Kazakh economy has mostly expanded; in 2024, its GDP grew by more than ten fold, from $24.9 billion to $288.4 billion. Oil and gas have been the driving factors of the expansion of new cities, foreign investments, and the improvement of living conditions. However, behind the success lie a few issues that are difficult to identify or may even go unnoticed until it is far too late. One of them is the housing bubble, in which the value of stocks, homes, and other real estate is greatly inflated over its true value before falling sharply.
Housing is one area in Kazakhstan where individuals are most affected by price increases. Over the last ten years, the value of apartments in Almaty and Astana has grown. From 215,000 KZT in 2014 to 495,000 KZT in 2023, the price per square meter increases at a compound annual growth rate of about 9-10%. A portion of this is typical since demand increases, earnings grow, and more people relocate to cities. However, prices have frequently increased more quickly than incomes.
Despite being relatively tiny, Kazakhstan’s stock exchange, KASE, is not immune to bubbles. Price fluctuations can be intensified since trade is dominated by a small number of corporations, most of which are connected to natural resources. Energy stocks increase when oil prices rise. The market crashes when oil prices drop. The true power of the firms themselves isn't usually reflected in this cycle. Rather, it demonstrates the vulnerability of a limited, resource-rich market to speculation.
Kazakhstan's commodity-based economy means higher oil, gas and uranium prices create more tax revenue, rising construction activity and household spending all around until prices drop and everything slows down. The "boom-bust" cycle could be termed a national bubble as opposed to the stock market crash, as the event occurred at a national level. The event was therefore described as a "sudden expansion followed by a sharp contraction". When the boom ends, housing projects are abandoned, banks are issuing bad debt, and jobs are gone.
Cheap credit is another risk. Both banks and government programs have made borrowing easier for households purchasing housing, vehicles and consumer goods. This can stimulate growth, though too much money chasing too few assets can also create price inflation. The banking sector in Kazakhstan had been plagued by banking woes. Several important banks collapsed due to bad loans. Lending that grows without control might bubble and destabilise within the Kazakh economy.
For some, the housing bubble isn't a major problem, because prices eventually go up, making buyers feel richer even in the short run. The problem with bubbles, however, is that they always burst. This would be a problem not just for banks and investors but also for families who bought homes that lost so much value they could no longer pay off their mortgages. With construction jobs disappearing and consumers scaling back spending, government intervention in the form of costly business bailouts would be necessary.
So what can be done? For one, regulators need to monitor housing affordability and the banks' appetite to lend. Red flags include much faster price rises than income rises. Close bank supervision could lessen bank risk in reckless lending. Kazakhstan should diversify its economy by growing agriculture, manufacturing, or digitization to reduce its dependence on wild fluctuations within oil or other commodity prices, which can shift income largely and make volatility. People learn and become financially literate to build human capital. They also help safeguard investors and households against the possible dangers and temptations linked to speculation.
Despite such a rosy outlook, there are still concerns that Kazakhstan may be vulnerable to market bubbles in the real estate, stock and commodities markets. Although bubbles may create excitement in the short run, the damage they wreak when they collapse is large.
Housing is one area in Kazakhstan where individuals are most affected by price increases. Over the last ten years, the value of apartments in Almaty and Astana has grown. From 215,000 KZT in 2014 to 495,000 KZT in 2023, the price per square meter increases at a compound annual growth rate of about 9-10%. A portion of this is typical since demand increases, earnings grow, and more people relocate to cities. However, prices have frequently increased more quickly than incomes.
Despite being relatively tiny, Kazakhstan’s stock exchange, KASE, is not immune to bubbles. Price fluctuations can be intensified since trade is dominated by a small number of corporations, most of which are connected to natural resources. Energy stocks increase when oil prices rise. The market crashes when oil prices drop. The true power of the firms themselves isn't usually reflected in this cycle. Rather, it demonstrates the vulnerability of a limited, resource-rich market to speculation.
Kazakhstan's commodity-based economy means higher oil, gas and uranium prices create more tax revenue, rising construction activity and household spending all around until prices drop and everything slows down. The "boom-bust" cycle could be termed a national bubble as opposed to the stock market crash, as the event occurred at a national level. The event was therefore described as a "sudden expansion followed by a sharp contraction". When the boom ends, housing projects are abandoned, banks are issuing bad debt, and jobs are gone.
Cheap credit is another risk. Both banks and government programs have made borrowing easier for households purchasing housing, vehicles and consumer goods. This can stimulate growth, though too much money chasing too few assets can also create price inflation. The banking sector in Kazakhstan had been plagued by banking woes. Several important banks collapsed due to bad loans. Lending that grows without control might bubble and destabilise within the Kazakh economy.
For some, the housing bubble isn't a major problem, because prices eventually go up, making buyers feel richer even in the short run. The problem with bubbles, however, is that they always burst. This would be a problem not just for banks and investors but also for families who bought homes that lost so much value they could no longer pay off their mortgages. With construction jobs disappearing and consumers scaling back spending, government intervention in the form of costly business bailouts would be necessary.
So what can be done? For one, regulators need to monitor housing affordability and the banks' appetite to lend. Red flags include much faster price rises than income rises. Close bank supervision could lessen bank risk in reckless lending. Kazakhstan should diversify its economy by growing agriculture, manufacturing, or digitization to reduce its dependence on wild fluctuations within oil or other commodity prices, which can shift income largely and make volatility. People learn and become financially literate to build human capital. They also help safeguard investors and households against the possible dangers and temptations linked to speculation.
Despite such a rosy outlook, there are still concerns that Kazakhstan may be vulnerable to market bubbles in the real estate, stock and commodities markets. Although bubbles may create excitement in the short run, the damage they wreak when they collapse is large.
