What's happening with the real estate market?
Author: Tatyana Rybakova
For many years, even decades, investing in real estate in Russia was considered the best way to invest. What would happen to stocks, rubles, gold, and other assets was still unknown, but an apartment is still an apartment, most Russians reasoned. But now it's clear that this was an illusion.
The final straw—and perhaps the nail in the coffin of the "cast-iron investment" myth—could be the case of the development company Samolet. Samolet, the largest residential developer today, has approximately 4,5 million square meters of ongoing construction projects across Russia, according to Nash.dom.rf, - according to rumors, requested In early February, the government secured a preferential loan of 50 billion rubles in exchange for collateral in the form of a blocking stake in the company. The reason is clear: last year, Samolet's net debt was over 350 billion rubles, with sales of 272 billion rubles. Samolet itself, however, refuted The fact of such an appeal was immediately reported, however, that the government had refused direct support to the developer but was prepared to consider indirect measures. The issue was scheduled to be discussed at a Ministry of Finance meeting on February 20, but at the time of writing, no decisions had been made.
Concrete fever
The Samolet story is very typical of today's new-build market. When the first subsidized mortgage program was launched in April 2020, it wasn't intended to improve housing affordability. Housing was already affordable, even overly affordable: the onset of the COVID-19 pandemic confined everyone to their homes. People didn't know whether they'd be alive and well tomorrow, let alone whether they'd have a job or income, so buying a home wasn't, let's say, a priority. New-build sales volumes collapsed By 65-70%, developers began desperately seeking help from the president and the government. And such help was provided: preferential mortgages at 6% per annum (market mortgages were just over 8% per annum at the time) on new buildings, a reduced down payment of 10% (most large developers immediately offered down payment installments). Developers were saved, which was the goal of this measure. The pandemic subsided (and the strict quarantines were lifted even earlier), demand in the housing market revived, and, of course, people preferred new buildings. And how could they not, given that prices for new buildings have traditionally been lower than those of similar existing properties, and the mortgage terms are also much more favorable? Of course, you still have to wait for a new building to be completed, but in 2020, there were quite a few nearly finished homes, and developers began offering apartments with finishing, and some even with kitchens. People no longer feared being defrauded by equity holders: by that time, the escrow account system was in full swing: people paid money not to the developer, but to the bank, which then disbursed the money to the developer as construction progressed. If anything happened, all the money would be returned to the buyers, and the bank would deal with the developer.
In general, it must be acknowledged that the measures adopted in April 2020 were quite adequate given the prevailing situation. But then the maxim "nothing is more permanent than temporary" came into play. The preferential mortgage rates were so popular that, instead of ending, the program began to evolve. The goal was no longer to save developers who had nearly gone bankrupt during the pandemic, but to improve housing affordability. However, as the program progressed, housing affordability became increasingly elusive, becoming a distant horizon.
In 2020 year average price The average price of a one-room apartment in Russia was 2,8 million rubles. In 2021, the price of one-room apartments increased by 17,5%, reaching 3,3 million rubles. In 2022, the largest price increase was observed—30,3%, leading to an increase in the average price to 4,3 million rubles. In 2023, the rate of price growth slowed to 7%, bringing the average price of a one-room apartment to approximately 4,6 million rubles. words According to Alexander Danilov, Director of the Bank of Russia's Department of Banking Regulation and Analytics, housing prices in new buildings increased by 80% from 2020 to 2023, and by 51% in the secondary market.
Meanwhile, the mortgage rate during this time, following the Central Bank rate, rose from 8,25% to 16-17%. By that time, the preferential mortgage rate had only risen to 8%. And although the conditions for obtaining it were tightening, its popularity only grew—unsurprising given the gap between market and preferential terms. Amid constant threats to end preferential mortgages, a real frenzy ensued. People bought apartments, like they once bought salt and buckwheat—with all their money, and even borrowed as much as they could, wherever they could. They bought for future use—for children, for rent, for resale, for retirement—in Moscow, the Moscow region, in the south, in Kaliningrad, in the provinces—wherever they could. Developers fought over land for development at auctions, fences with beautiful renderings of future neighborhoods popped up like mushrooms. And then it all ended.
End of abundance
The Central Bank, quite frightened by the excitement in the housing market, began to ring all the alarm bells, warning He was concerned about the inflating of the housing bubble and began systematically tightening the terms of mortgage lending. But he even more severely restricted the then-widespread practice of "installment plans from developers": developers offered anyone who couldn't get a preferential loan a 1-2-3-year installment plan. By then, preferential mortgages were primarily intended for families with children, and young families were encouraged to buy an apartment now and then, after the birth of a child, take out a "family" mortgage. Moreover, Central Bank rates, which had soared in 2022 with the start of the war, began to decline quite rapidly—and mortgage rates fell with them. "Take an installment plan now, and then, in three years, the mortgage will become cheaper, and you'll get one at lower rates," developers offered buyers.
Unfortunately, not only did rates not fall, they actually began to rise. Inflation, fueled in part by rising housing prices, forced the Central Bank to raise the rate to its maximum, 21%, in 2024. Mortgage rates became unaffordable, and preferential mortgage terms became difficult to meet.
However, the number of buyers of new buildings has also decreased. On the one hand, by the end of 2024 average cost of housing In Russia, the average price for housing increased by 134% compared to 2020, reaching 155 rubles per square meter in major cities. In Moscow, the center of the booming demand of these years, the growth was even greater. impressive: 2,5 times, to 736 rubles per square meter. This price has become unaffordable for most potential buyers. Primarily because the "military Keynesianism" that sharply increased wages for many citizens also ended—by mid-2024. However, wage growth still hasn't kept pace with rising housing prices.
Meanwhile, the average construction period is 2-3 years at best. Developers sold off all their inventory and projects started before 2020—so successfully that at one point, the market feared a shortage—and happily began laying the groundwork for huge volumes of new construction. And then it all ended.
The hardest hit were the main beneficiaries of the preferential mortgages—large national developers like Samolet, PIK, LSR, Etalon, and others. For a while, they survived on the excess profits they earned during the boom years. There was some hope that, with inflation clearly declining, the Central Bank would soon lower the rate to at least 12-13%: surely it couldn't be that real inflation was 6% and the rate was 16%?
It turns out it can. Because the government began to influence inflation, seeking money to cover the deficit by raising corporate income tax, personal income tax, VAT, tariffs, excise duties, duties, and introducing a recycling fee... And the Central Bank decided to lower the rate symbolically, nothing more.
That's when the developers realized it was time to ask for help.
Rescue drowning
Will the government help Samolet? Most likely, yes, but not much, and at a good price. For example, by selling its land bank, which in 2025 was valued at 46,5 million square meters, or more than 1 trillion rubles. But there's a problem: Samolet acquired land primarily not in Moscow, but in the Moscow region and other regions. Moreover, at very high prices and with very high-interest loans.
Expecting direct support from the government isn't worth it: that would mean lining up not only other developers, but also coal miners, metallurgists, oil producers, timber processors, automakers... and the entire civil sector, from small businesses to the largest. And the government already has no money: its budget, which grew to 5 trillion rubles last year, is already low. federal budget deficit This year, the debt could exceed 10 trillion rubles. Previously, many experts expressed confidence that the wealthiest regions would help regional developers, but today even this hope is fading: the regional debt already amounts to more than half of the federal total.
However, it's unlikely that developers will be left to their own devices. After all, most of them are already systemically important players, the very same "too big to fail" players. And remember those installment plans offered by developers? These funds bypassed escrow accounts, meaning buyers under these plans are not protected in the event of the developer's bankruptcy. The emergence of new defrauded equity holders in the current situation is probably the last thing the authorities need.
Most likely, a range of measures will be applied, tailored to each developer. I don't rule out the possibility of a state corporation being established that would receive a portion of the land bank and new buildings of affected developers as collateral for loans. It's also possible that this could be part of the DOM.RF state corporation, which currently serves as a financial development institution in the housing sector. It would also be advisable to create a state and/or municipal system of apartment buildings, with apartments rented out to vulnerable groups. This would also civilize the rental market, which, in turn, would dampen demand for real estate purchases. However, in any case, there's no doubt that preference will be given today not to the most effective measures, but to those that require the least budget expenditures—or, better yet, none at all.
And what about the buyers?
Amid the frenzy in the new-build market, demand for resale properties began to rise, and with it, prices. But then something happened. Valley effect — Sellers of existing homes flocked to court, claiming they sold their apartments under the influence of fraudsters. And although after the Supreme Court ruled in favor of apartment buyer Larisa Dolina, courts have become less likely to side with sellers, such cases haven't completely disappeared. And in any case, few people are willing to buy an apartment only to spend time and money on court cases and lawyers.
So right now, those looking to buy a home are frozen in a state of bewilderment. New buildings aren't showing any signs of getting cheaper—and it's scary to buy them when the developer is at risk of going bankrupt. Buying a resale property is no less scary. Housing as an investment looks increasingly dubious—but other, more reliable options in Russian conditions are also lacking.
However, in January, According to According to the Mir Kvartir portal, prices for existing homes grew faster than for new buildings: by 2% on average across Russia versus 0,7%, respectively. Demand in the existing market was also higher. As Pavel Lutsenko, the portal's CEO, explains, those who don't qualify for the current preferential "family" mortgage terms are turning to the existing market: while market mortgages offer 17-19% annual interest rates, prices on the existing market are also 19% lower on average.
However, the "average" increase refers primarily to price increases in both capitals and popular cities with solvent populations. Overall, according to the portal's data, the price per square meter increased in 65 of the 70 cities studied, decreased in four, and remained unchanged in one, according to analysts' calculations.
The largest price increases per square meter were seen in the Leningrad Region (+6,3%), Perm (+6%), Moscow (+5,6%), St. Petersburg (+5,1%), Moscow Region (+4,4%), Cheboksary (+3,7%), Chelyabinsk (+3,6%), Smolensk (+3,6%), Kursk (+3,4%) and Kazan (+3,4%).
Among the cities with a decrease in price per meter: Yekaterinburg (-0,4%), Kirov (-0,3%), Yakutsk (-0,2%), Surgut (-0,1%), with zero growth - Vladikavkaz, as well as with a minimal: Rostov-on-Don (+0,1%), Arkhangelsk (+0,2%), Vladivostok (+0,2%), Murmansk (+0,3%), Krasnodar (+0,3%).
However, such growth is more like stagnation. It's unlikely to help developers climb out of their debt trap. Meanwhile, they're increasingly missing construction deadlines. For example, in the Chelyabinsk region, 28% of developers are guilty of this. And the government has lifted the moratorium on fines for construction delays, so now developers will be responsible for these costs as well.
No, this isn't the beginning of the housing market collapse yet. But it's already that moment of silence where a slight crackling sound can be heard.
