House prices up 9.96% during 2022

Russia’s house prices continue to rise rapidly, despite its struggling economy amidst the ongoing Russia-Ukraine war. Nationwide real house prices soared by 9.96% in 2022 from a year earlier, up from the previous year’s 6.13% growth. The past four quarters have been the highest year-on-year growth rates recorded since 2007. It is now its eighteenth consecutive quarter of y-o-y price increases. During the latest quarter, nationwide house prices increased slightly by 0.7%. 

In fact in nominal terms, house prices skyrocketed by 23.05% during 2022, as inflation surge amidst a volatile rouble and the unprecedented sanctions imposed by Western countries against Russia due to its invasion of Ukraine.

But most of the growth were from outside the city centres. In fact, Moscow’s real house price growth slowed to 5.9% y-o-y in 2022, from 7.48% in 2021. In St. Petersburg, real house prices actually fell by 15.28% in 2022 from a year ago, following an annual growth of 16.27% in the prior year.

Nationwide house prices plunged 29% (inflation-adjusted) from 2011 to 2018. The housing market started to recover in 2019 and continued to strengthen in the past three years despite the pandemic and the war.

Housing loans continue to rise, but outlook is gloomy

In February 2023, total housing loans outstanding rose strongly by 17% y-o-y to RUB 13.93 trillion (US$181 billion), following growths of 18.1% in 2022, 25.2% in 2021, 21% in 2020 and 17% in 2019, according to figures from the Central Bank of the Russian Federation.

However, the outlook remains gloomy as hundreds of thousands of Russians have left the country in recent months and have been purchasing properties in other countries instead, such as Dubai.

Rents, rental yields: yields are poor both in Moscow and St Petersburg, at around 3% to 5%

Russia: city centre apartment buying price, monthly rent (120 sq. m)
	Buying price	Rate per month	Yield
Moscow	$1,423,920	$3,820	3.22%
St. Petersburg	$  586,320	$2,129	4.36%

Recent news. The Russian economy shrank by 2.1% in 2022 from a year earlier, , much less than expected despite its invasion of Ukraine and sanctions imposed by European countries and the United States, according to the Federal State Statistics Service. This followed a 4.7% growth in 2021 and a 2.7% decline in 2020. The International Monetary Fund (IMF) expects Russia’s economy to grow by a meager 0.3% this year.

In March 2023, the CBR decided to keep the key interest rate at 7.5%, following a cumulative 1,250 basis point cut since February 2022, to boost economic activity amidst the deterioration of foreign trade due to the EU’s oil embargo. Inflation eased slightly to 11% in February 2023, after reaching a two-decade high of 17.8% in April 2022 – two months after Russia launched an all-out invasion of Ukraine in February 24, 2022.