House prices up by 5.86% y-o-y in Q3 2020
Russia’s house prices rose by 5.86% during the year to Q3 2020, an improvement from last year’s 3.63% increase and its best showing since Q4 2012. During the latest quarter, nationwide house prices increased 2.7%.
Moscow’s house prices were up by 1.52% y-o-y in Q3 2020, an improvement from y-o-y declines of 0.7% in Q2 and 5.85% in Q1. In St. Petersburg, house prices continue to rise strongly by 14.57% during the year to Q3 2020, its biggest y-o-y increase since Q1 2009.
Nationwide house prices plunged 29% (inflation-adjusted) from 2011 to 2018. The housing market started to show improvements last year.
Demand is rising strongly
Residential investment in Russia totalled RUB 55 billion (US$727 million) in 2019, up by a whopping 70% from RUB 33 billion (US$436 million) worth of deals in 2018, according to the CBRE. In Q3 2020, total housing loans outstanding rose strongly by 18.7% y-o-y to RUB 8.59 trillion (US$ 113.4 billion), following a growth of 17% during 2019, based on figures from the Central Bank of the Russian Federation.
Residential completions rose by 6% last year from a year earlier, after three years of declines, according to mortgage provider Dom.RF.
Rents, rental yields: yields are poor both in Moscow and St Petersburg, at around 3% to 4%
Moscow apartment costs are high, at around €11,866 per sq. m.
|Russia: typical city centre apartment buying price, monthly rent (120 sq. m)|
|Buying price||Rate per month||Yield|
|St. Petersburg||$ 586,320||$2,129||4.36%|
Recent news. In October 2020, the Central Bank of Russia (CBR) kept its key interest rate unchanged at an all-time low of 4.25%, after four rate cuts this year in an attempt to buoyed the slowing economy amidst the coronavirus outbreak. The key rate peaked at 17% in December 2014.
The Russian economy contracted by 3.6% year-on-year in Q3 2020, following an 8% decline in the previous quarter, as the country took a severe hit from the COVID-19 pandemic and related lockdowns, as well as a plunge in oil prices. For the full year 2020 the Russian economy is projected to shrink by about 4% to 5%, following expansions of 1.3% in 2019 and 2.5% in 2018, based on central bank forecast.