The Russian housing market is growing, with a boom in both prices and demand, despite the COVID-19 pandemic. Russia’s property prices rose by 9.14% in 2020. However, national figures do not show the great disparity within the country’s housing market.
How expensive is it to live in Russia?
The average price in the housing market in Moscow rose from RUB 212 000 ($2732) per sq. m in 2020 to RUB 283 000 ($3647) per sq. m in 2021. St. Petersburg has also experienced price rises, although the average price is lower than in Moscow. In 2020 the average price in the housing market in St. Petersburg was RUB 129 000 ($1663) per sq. m. In 2021 it increased to RUB 182 000 ($2346) per sq. m.
Prices have even risen in cities such as Omsk, a three and a half hour flight from the capital. The average price in the housing market in Omsk jumped from RUB 48 000 ($619) per sq. m to RUB 83 000 ($1070) per sq. m from 2020 to 2021. The difference in the average price in the housing market of Moscow and Omsk, therefore, is $2577 per sq. m.
However, Russia remains one of the more affordable places in the world to buy a home. In the UK, for example, house prices are also increasing. The average house price in the UK has increased by 10% in the year since November 2020.
However, the difference between the average price in the housing market of London and the housing market for the rest of England is $315 485. It is, therefore, almost twice as expensive to buy a property in London than anywhere else in the country. The average price of a flat in England was $329 570 in October 2021, compared with $593 643 for the average flat in London.
How does the Russian housing market compare to the housing markets in other countries?
Although prices also differ in Russia, even between Moscow and St. Petersburg, the average prices in both cities remain lower than in London. The price of London apartments increased by 6.2% to an average of $20 629 per sq. m in 2020. In comparison, the average price of an apartment in Moscow was RUB 186 636 per sq. m – or $2405 per sq. m – in September 2020.
The prices in some countries fluctuate not only between cities but also within each property type. In Hong Kong, for example, the price of apartments smaller than 100 sq. m dropped by 1-8.9% with prices ranging from $23 385 to $25 535 in 2020. On the other hand, apartments larger than 100 sq. m rose by 9.1-16.7% with an average price of $31 952 to $35 164 in 2020.
Overall, the average price of an apartment in Hong Kong is $28 570 per sq. m. An apartment in Hong Kong, therefore, is still on average almost 10 times more expensive than an apartment in either Moscow or St. Petersburg
However, over the past 12 years, the Hong Kong housing market has experienced one of the biggest increases in the world, with property prices soaring by 162%. Despite some stabilisation in the past few years, therefore, Hong Kong remains one of the most unaffordable places to live.
The housing market in France also remained mostly intact despite the pandemic. In Île-de-France, the country’s most populated region, the average property price increased by 2.1% in 2021. The average apartment cost $7665 per sq. m.
However, prices in the capital actually decreased by 0.2% and, on average, an apartment cost $12 661 in 2021. Although the prices in the Paris housing market decreased, they remain higher than the average property prices in the Russian capital.
Has the COVID-19 pandemic negatively affected housing markets?
Due to a supply shortage, the prices in the housing market in Israel soared from 2006 to 2017. However, the housing market in Israel has been more negatively affected by the coronavirus pandemic. Property prices fell by 5.8% in 2020 as the market suffered due to the pandemic.
Tel Aviv is the most expensive place to live in Israel but house prices dropped by 2.27% in 2020, with the average cost of an apartment ranging from $10 000 to $21 000 per sq. m.
In India, the economy has also struggled as a result of the COVID-19 pandemic. The housing market has been hit by a drop in demand and so prices have fallen.
Mumbai remains one of the country’s most expensive cities. The average price of an apartment stands at $10 000 per sq. m. However, the average price differs across the country. In Calcutta, for example, prices are much lower, ranging from $700 to $2100 per sq., making the city more comparable to Moscow or St. Petersburg – or even Omsk.
In 2020, the Russian government introduced a subsidised mortgage scheme, giving citizens access to more affordable housing. The scheme was an attempt to both boost and secure the housing market during the pandemic.
There are, however, concerns that the scheme will cause a ‘bubble’ and have negative consequences in the future. If house prices continue to rapidly increase under the scheme, it will fail to provide more affordable housing.
Conversely, when the scheme ends this summer, demand could drop and prices could fall. The question remains, therefore, as to whether the Russian housing market will continue to remain affordable in the future.