Analytics, Expert opinions

Russian housing market 2023: analysis, findings and forecasts

PERI has released its 2023 housing market report. As before, the market trends are tied to the Central Bank key rate, which remained high, directly affecting sales as well as putting housing on the market.

Alexey Maishev / RIA Novosti

General trends

With global economic trends remaining pretty much the same, no serious changes are occurring and none are expected. The Central Bank of Russia continues to implement its long-term strategy to curb inflation and maintains a fairly tight monetary policy.

The key rate remains in double digits: the regulator hiked the benchmark to 16% from 15% at its last meeting in December 2023. On the other hand, it is noteworthy that on February 16, 2024, the Central Bank decided against another rise for the first time since July 2023. According to the regulatory body’s comment, this is due to a slight decrease in inflation pressure; however, the trend is not strong enough to indicate deflation. Therefore, we should not be expecting any serious changes in the key rate, particularly its lowering.

Loans and mortgages

As a result, there is no expectation that market loans will get cheaper. After the key rate was raised in December, concessional mortgages for primary housing became more attractive compared to market loans. This is why the share of mortgages taken out for primary housing has increased, from 176,000 in December 2022 to 197,000 in December 2023, amidst the general decline in the amount of loans. In December 2023, 86,000 mortgages in total were issued for new housing, as opposed to only 57,000 year-on-year.

The future of concessional mortgages will be known in July 2024 as we will know then for how long the program will be extended and at what interest rate. While concessional mortgages are available on the current terms, they will be in higher demand than the general types of mortgages.

Despite the record number of loans issued in 2023, only 33% of new housing was sold in 2023, the remaining part being the housing still up for sale (43%) or properties that are not officially on the market yet (24%).

Expert reports and construction permits 

The number of expert reports issued has decreased by 38% compared to January and December 2022. It is the lowest number in the past three years. The majority of the residential complexes that were approved by experts last year are located in the Novosibirsk Region (94), the Chelyabinsk Region (68) and the Tyumen Region (66).

In 2023, 2,532 construction permits were issued for 3,665 residential buildings, as opposed to 2,995 permits for the construction of 4,479 residential buildings. This indicates that issuance of construction permits has decreased by 15% over the year. The number of buildings, apartments and the total area of housing approved for construction are similarly in decline.

Launching new properties

The general number of new residential complexes launched on the market was substantially high, showing a 22% growth. However, sooner or later, this indicator is expected to drop for lack of supporting conditions. It is sufficient to look at the amount of unsold housing above to see that it is too high for developers to market more properties. Developers are currently more interested in selling the housing that has already been built, which is not an easy task with the high mortgage rates and the general economic situation.

In 2023, the construction of 5,631 residential buildings was started as opposed to 4,344 buildings in 2022. We continue to observe a higher growth rate for buildings than apartments and square meters. These properties will suffice for commissioning in 2024 and 2025 but by 2026, the launch rate will be most likely twice as low, for the same reasons: developers are not in a rush to initiate new projects before they finish selling the properties already listed.

By Natalya Savelyeva, Business Analyst, PERI

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