After the end of a large-scale state-subsidized mortgage program, the housing market in Russia is cooling down, as high interest rates drastically reduce lending volumes, constraining demand and slowing the growth of sales prices. 

This extended overview from the Global Property Guide covers key aspects of Russia’s housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

• Housing Market Snapshot
• Historic Perspective
• Demand Highlights
• Supply Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

Residential property prices in Russia continue to rise, although the pace of growth is slowing due to the cancellation of the universal subsidized mortgage program and tightening conditions for commercial mortgages. According to the Federal State Statistics Service (Rosstat), the average price per square meter for new housing in the third quarter of 2024 reached RUB 175,076 (USD 1,962), reflecting a 2.28% quarter-on-quarter increase (0.27% inflation-adjusted) and a 30.56% year-on-year increase (20.22% inflation-adjusted). Meanwhile, secondary market prices averaged RUB 111,261 (USD 1,247) per square meter, showing an 8.38% quarter-on-quarter increase (a 0.98% decline when adjusted for inflation) and a 17.79% year-on-year increase (8.38% inflation-adjusted).

Russia's house price annual change:

One of the key concerns previously raised by Russia's central bank regarding the prolonged subsidized mortgage program was the sharp rise in prices for newly built housing, which created a significant price gap between the primary and secondary markets. The regulator expected this gap to narrow following the program's termination on July 1, 2024. However, Rosstat data indicates the opposite trend. By the end of Q3 2024, the price difference widened further, with the average cost of new housing exceeding secondary market prices by 57.3%, compared to 55.4% at the time of the program's cancellation.

In Moscow, primary housing prices reached RUB 345,406 (USD 3,871) per square meter, showing marginal growth of 0.11% quarter-on-quarter and 6.33% year-on-year. Conversely, secondary housing prices declined by 0.16% quarter-on-quarter and 4.43% year-on-year. In St. Petersburg, price dynamics were more robust, with primary market prices rising by 4.89% quarter-on-quarter and 27.45% year-on-year to RUB 271,951 (USD 3,048) per square meter, while secondary market prices increased by 1.94% quarter-on-quarter and 17.23% year-on-year to RUB 204,849 (USD 2,296) per square meter.

Data Source: Rosstat.

Industry experts surveyed by RBC predict moderate price growth in the primary market will persist in 2025, despite an anticipated decline in sales due to the universal subsidized mortgage program's cancellation, stricter conditions for targeted mortgage programs, higher commercial mortgage rates, and reduced new project launches in 2024. Analysts at DOM.RF forecast price increases for new housing to align with inflation. Similarly, an Expert RA representative noted: "A significant price drop is unlikely in 2025. Price growth is slowing under current macroeconomic conditions, but we expect a continued modest increase due to rising project costs for developers." Experts additionally highlighted the potential for localized discounts on under-construction properties, which are likely to remain marketing-driven rather than reflecting broader market trends.

The secondary market also faces pressure from high mortgage costs, prompting some sellers to transition from sales to rentals. Analysts forecast price stagnation in this segment throughout 2025. "We expect near-zero price movement, with potential declines in certain locations starting in the second quarter of 2025," said Alexey Popov, head of Cian Analytics, in an interview with RBC. He highlighted that areas with intense competition and abundant supply - particularly those with a high concentration of recently completed developments, such as Moscow, the Moscow region, and St. Petersburg - are most likely to see price reductions.

Historic Perspective:

Drivers Behind Russia's Property Boom and Bust

Since the early 2000s, Russia's economy began recovering from the financial crisis of 1998, supported by rising oil revenues, which significantly improved consumer purchasing power. This period saw a sharp surge in house prices. From 2000 to 2008, the price per square meter of residential properties increased fivefold in the primary market and sevenfold in the secondary market. Simultaneously, the volume of newly commissioned residential housing doubled, driven by an expanding mortgage market, which further fueled housing demand.

The 2008 global financial crisis had a substantial impact on Russia's real estate industry. Residential property prices began to decline, with a year-on-year drop of 9% in the primary segment and 6% in the secondary segment in 2009. The volume of newly commissioned housing decreased by 7% during the same period, reflecting a market slowdown. Nevertheless, government support for mortgages and subsequent economic stabilization helped the market recover in the following years.

In 2014, Russia's economy faced new challenges as international sanctions and a sharp depreciation of the ruble, alongside falling oil prices, led to rising inflation and a decline in purchasing power. While real estate prices in the primary market continued to grow modestly in ruble terms, the overall growth was constrained by economic stagnation. In dollar terms, prices experienced a significant decline due to the ruble's devaluation.

In response to the economic challenges of the COVID-19 pandemic in 2020, the government introduced subsidized mortgage programs, which triggered a sharp rise in housing demand. These low-interest mortgage schemes became accessible to a broader range of buyers, spurring heightened interest in newly built apartments. During the first two years of the subsidized mortgage programs (2020-2022), prices for primary market apartments surged, averaging an annual growth rate of 24%. This increase was primarily driven by artificially induced demand, as buyers hurried to secure homes under favorable loan conditions, fearing the program's potential discontinuation or less favorable terms. Contributing factors also included inflationary pressures, rising construction material costs, and limited market supply.

Although the growth in primary prices slowed to 15% year-on-year in 2023, the impact of subsidized mortgages continued to sustain demand, particularly in major cities. The deceleration was attributed to the fact that much of the solvent demand had already been satisfied during the program's initial two years.

Data Source: Rosstat.

Demand Highlights:

Sales Decreasing in Both Primary and Secondary Segments

The analysis of residential sales dynamics in Russia is complicated by the lack of transparency in reporting primary data on transactions. However, secondary indicators and anecdotal evidence from local experts point to demand moderating notably in 2024 after a spike in sales recorded in 2023, when growing property prices, interest rates, and the anticipated end of the state-subsidized preferential mortgage scheme encouraged many potential buyers to act.

According to the head of the Federal Service for State Registration, Cadastre and Cartography (Rosreestr), recently cited by Rossiyskaya Gazeta, 35 million transactions were registered in the eleven months of 2024. "These are figures that are absolutely comparable with the previous year. The dynamics of the real estate market... We do not see a slowdown in the real estate market," he said. At the same time, the head of Rosreestr mentioned that the overall volume of transactions remains high due to activity in the individual housing construction segment and a significant number of transactions for individual houses.

A detailed analysis of the available data on registrations of shared-equity development contracts (indicating activity in the primary market) and standard sales contracts (indicating activity in the secondary market) from H1 2024 posted by the property platform Cian shows a more nuanced and uneven dynamic, however. According to Cian, the demand in the first half of the year was mainly driven by the primary market (+18% compared to H1 2023): the potential buyers of properties under construction were rushing to take advantage of interest rates significantly below the market benchmark offered by the state-subsidized mortgage program to be halted in July, while sales in the secondary market decreased (-22% compared to H1 2023).

Note: YoY trend for 2024 represents change vs the comparable period in the previous year (9M 2024 vs 9M 2023).
Data Source: Rosreestr.

In H2 2024, in the environment of rapidly growing interest rates and overall high inflation, the development institute for the residential sector DOM.RF anticipated demand for housing to "decrease significantly". This assessment is backed by the quarterly data on shared-equity development contract registrations from Rosreestr, which indicates a sharp decline in Q3 2024 (-33.9% compared to the previous quarter and -43.2% compared to the same period in 2023). In total, in the nine months of 2024, 611,587 thousand shared-equity development contracts were registered, which is 9.4% below the comparable period the year before, indicating a slowdown in primary sales.

Looking ahead, industry experts interviewed by RBC anticipate a further decline in demand for the primary segment of the residential market in Russia (by as much as 20-25% in 2025 compared to 2024 levels). Cian expects the demand for primary properties to be stimulated by developers via a wider selection of alternative purchase options (such as discounts, installment plans, and trade-in schemes): "In a situation when it is impossible to get a commercial mortgage and not everyone can qualify for targeted subsidized programs, developers themselves will have to stimulate demand and offer good purchase conditions." As for the secondary segment, Cian also projects further market slowdown: "Demand will decline - it will begin to recover when mortgage interest rates return to 9-12% p.a., which definitely will not happen in 2025."

Supply Highlights:

Residential Construction Activity Sustains Momentum, Driven by Growth in Private Housing Commissioning

Residential construction activity in Russia remains robust following the record-breaking year of 2023. According to Rosstat, 93.8 million square meters of housing were commissioned across the country in the eleven months of 2024, maintaining a level comparable to the same period in 2023.

The composition of housing completions continued to shift. While the commissioning of apartment buildings declined by 18.85% year-on-year, the volume of individual houses increased by 15.96% over the same period, representing nearly 65% of total commissioned housing.

Deputy Prime Minister Marat Khusnullin, as quoted by RBC, attributed the growth in individual housing construction to several factors, including the increasing popularity of private homes among Russians, preferential programs, and improvements in transport and utilities infrastructure. He also highlighted the impact of the social gasification program and streamlined registration processes in facilitating this trend.

Data Source: Rosstat.

At a government meeting held at the President's office, Khusnullin announced that the preliminary full-year figures for housing commissioned in 2024 exceeded 107 million square meters, a 2.7% decrease compared to the record year of 2023. "Due to systemic support measures, annual growth in housing commissioning volumes increased from 82 million square meters in 2019 to 110.4 million square meters in 2023. Last year, we commissioned 107.4 million square meters of housing," he stated.

Since 2019, Russia has built a total of 577 million square meters of housing. "This is a serious figure even on a global scale. We have renovated 12% of the entire housing stock," Khusnullin added, noting that this figure is expected to grow to 20% by 2030.

Looking ahead, the conclusion of preferential mortgage program poses potential challenges to sustaining the current pace of housing construction. Minister of Construction Irek Faizullin noted that while construction in 2024 has been ahead of schedule, there are signs of a possible slowdown. "We are not under the illusion that we will always act so effectively. There are also prerequisites for a reduction - this is a reduction in preferential mortgages," Faizullin said in an interview with Rossiya 24. Despite this, Faizullin expressed confidence in the continuation of regional programs and other targeted schemes, such as family and IT mortgages, which will help support housing construction in the coming years.

The Minister reported that approximately 115 million square meters of housing are currently under construction, equivalent to nearly 2.5 million apartments, with land allocated for an additional 0.5 billion square meters of future development. "The goal is to reach 33 square meters per resident of our country. We expect to achieve this target by 2030 and lay the foundation for implementing the corresponding housing program until 2036," Faizullin concluded.

Data Source: Rosstat.

Rental Market:

Rents Surge with Further Increases Expected as Homeownership Becomes Less Accessible

Rental prices across Russia saw significant increases in 2024. According to DOM.RF's Q3 2024 report, average rental rates in cities with populations over one million (excluding Moscow and St. Petersburg) rose by 17% quarter-on-quarter, reaching RUB 43,700 (USD 490) per month. In cities with populations between 500,000 and one million, rental rates increased by 14%, reaching RUB 35,500 (USD 298) per month.

Mikhail Goldberg, Head of the DOM.RF Analytical Center, explained to RBC: "The surplus supply that previously characterized the rental market began to diminish in mid-2023, coinciding with rising interest rates and reduced affordability of mortgages outside government-subsidized programs. As a result, demand for rental housing increased, driving up prices. The cancellation of widespread government housing support further constrained affordability in the primary market, prompting more individuals to turn to renting."

Data Sources: Cian, DOM.RF.

Average monthly rents in major cities, Q3 2024:

Preliminary annual data for 2024, reported by Domclick to RBC, confirms the upward trend in rental prices, showing a 17% increase in the median cost of rent per square meter across the country. "The most significant growth was observed in the three-bedroom apartment segment, where rental prices rose by 24% over the year," stated Alexey Leipi, Director of the Domclick division at Sberbank. "Two-bedroom apartments followed with a 19% increase, while rents for studios and one-bedroom apartments grew by 17% and 14%, respectively. This trend is unsurprising, given the narrowing pool of potential borrowers eligible for key mortgage programs such as the Family Mortgage, which has increased the popularity of larger housing units," he added.

According to the research carried out by the Global Property Guide in January 2025, gross rental yields for residential units in Russia averaged 6.44%. Regionally, the highest yields among the assessed submarkets were observed in Rostov-on-Don (7.91%), Novosibirsk (7.42%), and Yekaterinburg (7.28%), while the largest cities Moscow and St. Petersburg both showed lower yields at 5.24% and 6.11%, respectively.

Experts expect rental rates to continue rising in 2025, as noted in interviews with the real estate portal Cian. Ksenia Astafieva, Head of Digital Rentals at Samolet Plus, anticipates an increase of at least 15%, citing stable economic conditions and tighter credit policies. Alexey Popov, Head of Cian Analytics, highlights the role of rising interest rates and stagnant wage growth among white-collar workers, projecting a similar rise of 13-15%. Offering a more cautious outlook, real estate expert Alexander Kharibin predicts a 10% increase in line with inflation, with rates dipping in spring before rebounding during the summer's peak demand.

Pavel Lutsenko, CEO of World of Apartments, adds that rental rate growth is expected to outpace property price increases, driving higher yields and enhancing the investment appeal of rental properties.

Mortgage Market:

New Lending Plummets After End of Major Subsidized Program

At the end of October 2024, the Bank of Russia (CBRF) raised its key rate to a decade-high level of 21% to tighten monetary conditions and regulate aggregate demand in an attempt to curb inflation in the country. Most recently, during the December policy meeting, the rate was maintained at the same level; the central bank, however, noted that further increases are possible: "Due to the considerable slowdown in the growth of lending, it was decided to take a break and assess whether these changes were robust and how quickly they would impact price dynamics. The participants [of the meeting] noted that if lending resumed growing at an elevated rate and inflation trends did not reverse by the Bank of Russia Board of Directors meeting scheduled for February 2024, the regulator would have to consider the option of raising the key rate further."

Following the key rate trajectory, interest rates on commercial mortgages (general market offers by the banks, excluding state-backed programs) have been recording rapid growth since mid-2023, which accelerated even further in the second half of 2024 after the largest government-subsidized lending program, the so-called Preferential mortgage, was halted. According to the reporting on the top 20 mortgage banks in Russia by the research company Frank RG, in November 2024, the weighted average interest rate on commercial loans stood at 28.5% for the primary residential market and 26.6% for the secondary residential market, up about 10 p.p. since June and over 12 p.p. since the same period in 2023.

Data Sources: CBRF, Frank RG.

The rapid growth of interest rates on commercial mortgages beyond affordable levels for the majority of the population led to a notable drop in new disbursements in the second half of 2024, with the demand for lending now mainly supported by the remaining subsidized programs such as the so-called Family mortgage, IT-mortgage, and Far-Eastern & Arctic mortgage - niche programs available to specific groups rather than the general population, all offering reduced rates significantly below market levels. At the backdrop of this shift, the CBRF reported the monthly weighted average interest rate on all new mortgages issued at 9.01% in November 2024, down from 9.65% in October and 10.19% in July but still above the comparable period in 2023 and 2022.

Interest rates on new mortgages, monthly weighted average:

After a strong growth in volume and number of mortgage loans extended in 2023, new lending in Russia plummeted in the second half of 2024 after the end of the state-subsidized Preferential mortgage program. In the eleven months of 2024, the CBRF reported a total of 1.2 million new mortgage loans amounting to RUB 4.6 trillion (USD 45.7 billion), which was 34.3% below the volume reported during the same period the year before. The volume of subsidized lending during this period dropped by 18.6% year-on-year, and the volume of commercial lending by 56.7% year-on-year. At the same time, the share of state-subsidized loans in total new lending increased notably from about 27% in 2021 to 60.5% in 2023 and nearly 73% in the eleven months of 2024.

Looking ahead, analysts from Frank RG anticipate a further decline in mortgage disbursement in 2025. According to their assessment, new lending will drop 17% this year to about RUB 4 trillion, which would mark the lowest level since 2019.

Data Source: CBRF.

Overall, in the last decade, the mortgage market in Russia has expanded nearly five-fold, with an average annual growth of 20.4% between 2015 and 2023. Its relative size, while still limited compared to the national economy, grew from an estimated 4.7% of GDP at current prices in 2015 to 10.6% in 2023. In the near future, however, further expansion of the market will likely be restricted by prohibitively high interest rates in the commercial segment and limited access of the population to the remaining government-backed programs. As of November 2024, the total value of outstanding mortgage loans reported by the CBRF reached RUB 20 trillion (USD 198.9 billion), a 10% increase since the end of the previous year. Mortgages represent a little over half (54%) of outstanding credit extended to households in Russia.

Data Sources: CBRF, Rosstat.

Socio-Economic Context:

Signs of a Slowdown After a Period of Strong Growth

The strong expansion of the Russian economy from the end of 2023 continued into the first half of 2024, driven by private consumption and investment (additionally boosted by the state-financed expansion of the war-related sectors, including transportation or machinery). However, later in the year, the first signs of a slowdown (such as decelerating industrial production and softening retail sales growth) emerged, suggesting a cooling of the economy. The International Monetary Fund (IMF) estimates the country's real GDP growth at 3.6% in 2024, with a slowdown to 1.3% and 1.2% expected for 2025 and 2026, respectively. The Autumn Economic Forecast from the European Commission includes slightly higher figures but also expects the growth rate to fall to 1.8% in 2025 and 1.6% in 2026.

After easing from the 2022 peak, the Consumer Price Index (CPI) inflation in Russia has been re-accelerating throughout 2024, most recently reported by Rosstat at 9.52% in December 2024, significantly above the central bank's 4% target. With the persistently tight monetary policy maintained by the CBRF, however, it can be expected to moderate in the upcoming periods. The IMF projections currently see inflation in Russia at 5.9% in 2025 and 4% in 2026, which is in line with the forecast from the European Commission expecting 5.7% in 2025 and 4.5% in 2026.

The country's labor market remains tight, with the unemployment rate most recently reported by Rosstat at 2.3% at the end of November 2024.

Data Source: IMF.

The overall risks to Russia's economic growth are seen as broadly balanced. Recently adopted tax hikes can be expected to support non-energy revenues, helping to contain the country's budget deficits despite elevated war-related expenditures. "On the upside, a smaller-than-expected deceleration in real wage growth and a less pronounced impact of the tight monetary policy on investment activity could cushion the slowdown in GDP growth. On the downside, new sanctions and stricter enforcement could further limit exports and acquisition of imported technology," said the latest forecast from the European Commission.

Amid the ongoing conflict in Ukraine and continued international sanctions, the Russian national currency remains weak, the exchange rate experiencing high volatility and averaging RUB 92.66 per USD 1 and RUB 100.28 per EUR 1 in 2024, based on the CBRF official daily rates.

Data Source: CBRF.

Sources:

1. Federal State Statistics Service (Rosstat)
   1. National Accounts (RU): https://rosstat.gov.ru/
   2. Prices and Inflation (RU): https://rosstat.gov.ru/
   3. Construction (RU): https://rosstat.gov.ru/
   4. Labor force, Employment and Unemployment (RU): https://rosstat.gov.ru/
   5. Socio-Economic Situation in Russia, January-November 2024 (RU): https://rosstat.gov.ru/
2. Bank of Russia (CBRF)
   1. Key Rate: https://www.cbr.ru/
   2. Summary of the Key Rate Discussion: https://www.cbr.ru/
   3. Housing (Mortgage) Loan Market: https://www.cbr.ru/
   4. Information on the Housing Mortgage Lending Market In Russia, November 2024 (RU): https://www.cbr.ru/
   5. Dynamics of the Official Exchange Rates: https://www.cbr.ru/
3. Federal Service for State Registration, Cadastre and Cartography (Rosreestr)
   1. Information, Analytical Reports (RU): https://rosreestr.gov.ru/
4. International Monetary Fund (IMF)
   1. Country Overview: Russian Federation: https://www.imf.org/
5. European Commission
   1. European Economic Forecast, Autumn 2024: https://economy-finance.ec.europa.eu/
6. DOM.RF
   1. H1 2024 Results in the Housing Sector (RU): https://xn--d1aqf.xn--p1ai/upload/iblock/359/596qcc3bs0nnte7v4pey15mlim7pfmcn.pdf
   2. Housing Rental Market Review for Q3 2024 (RU): https://xn--d1aqf.xn--p1ai/
7. Frank RG
   1. Mortgage Market Research (RU): https://frankrg.com/
   2. In 2025, the Mortgage Market Will Fall by Almost 17% (RU): https://frankmedia.ru/
8. Cian
   1. 2024 So Far Has Been a Successful Year for the New Builds, not for the Secondary Market (RU): https://cian.ru/
   2. Secondary Market - 2025: What Will Happen to Prices and Supply (RU): https://cian.ru/
   3. Prices for New Builds in 2025: What Awaits Buyers (RU): https://cian.ru/
   4. Rent 2025: What Will Happen to Rates and How to Rent an Apartment Cheaper (RU): https://ekb.cian.ru/
9. Forbes
   1. Mortgage Freezes: What Will Happen to the Housing Lending Market in 2025 (RU): https://www.forbes.ru/
10. RBC
    1. What Will Happen to Prices on New Builds in 2025 (RU): https://realty.rbc.ru/
    2. Rosstat Names Regions With Falling Prices for New Buildings (RU): https://realty.rbc.ru/
    3. Analysts Have Given a Forecast for Housing Prices in Russia for 2025 (RU): https://realty.rbc.ru/
    4. Over 107 Million Square Meters of Housing Built in Russia in 2024 (RU): https://realty.rbc.ru/
    5. The Ministry of Construction Saw the Risks of a Drop in Housing Commissioning With the End of Preferential Mortgages (RU): https://realty.rbc.ru/
    6. Russian Housing Rental Prices Hit New High (RU): https://realty.rbc.ru/
    7. Domclick Estimates the Growth of Rental Housing Prices in 2024: https://realty.rbc.ru/
11. Reuters
    1. Russia Braces for More Tax Rises…: https://www.reuters.com/
12. The Bell
    1. Russia Ends Subsidized Mortgages, Leaving a Housing Bubble and Inequality Behind: https://en.thebell.io/
13. Rossiyskaya Gazeta
    1. Rosreestr Names Average Value for Housing Transactions (RU): https://rg.ru/
    2. Rental Incomes Increased by Almost a Third (RU): https://rg.ru/