Arctic Russia: a vast region and its people
The Arctic land area covers about 5 million square kilometers, roughly a third of the country. The Russian Arctic traces the Arctic Ocean coastline and spans parts of nine regions, including Murmansk, Arkhangelsk, Yamalo-Nenets, Nenets, and Chukotka Autonomous Okrugs, as well as Krasnoyarsk Territory, the Sakha Republic (Yakutia), Komi, and Karelia.
In this expansive landscape, people stand out as the most essential resource. The region’s progress hinges on its inhabitants, with development tied to the lives and livelihoods of those who call the Arctic home. Since 1989 the population has declined by about a third, posing a challenge to sustained growth. Today, roughly 2.6 million people reside in the Arctic, shaping the social and economic fabric of the area.
By 2020 Arctic development had become a strategic priority for the nation. State support measures play a pivotal role, given the extreme climate, vast distances, and communities scattered away from major economic hubs.
Support with action
The Strategy of the Russian Federation for the development of the Arctic region and ensuring national security until 2035 outlines the main directions, tasks, and measures. For the first time, the document places a clear emphasis on improving the quality of life for residents. To carry out this strategy, a State Program on Social and Economic Development of the Arctic was launched.
Unprecedented steps are being taken to attract investors and create jobs, laying the groundwork for broad-based growth in the region.
In 2020, the Arctic became the world’s largest special economic zone
Today, around 620 companies operate within the Arctic zones of the Russian Federation. Earlier this year, the first 100 investment projects were completed, providing employment to about 2,300 people. These outcomes demonstrate progress under the new development framework.
According to Rosstat, the average monthly salary in the Arctic in 2022, excluding small businesses, surpassed the national average, nearing 110,000 rubles. The income gap between the top 10 percent and the bottom 10 percent of Arctic residents in 2021 stood at 8.3, well below the national figure of 15.2.
Broadband access is widespread across the Arctic, with connectivity just above the national average. If the overall rate is 85.5 percent, the Arctic enjoys 87.3 percent connectivity.
The Arctic Development Strategy prioritizes state support for housing, engineering, and social infrastructure, along with a framework of social guarantees for people living and working there.
housing problem
Quality of life depends on housing, and the Arctic region shows a mix of stark contrasts. Some communities face depopulation, while others grow more comfortable yet confront rising housing costs.
Remarkably, the Arctic is both the sparsest and most urbanized area in the country. The population density averages 0.88 people per square kilometer, about nine and a half times lower than the national average. Yet 89 percent of Arctic residents live in urban settings, the highest urbanization rate in Russia. The Far North includes around 90 cities and urban-type settlements.
Another notable feature is the large share of working-age residents, nearly 70 percent, a figure higher than in many other regions. This makes housing affordability and construction speed critical challenges for northerners. Two primary tasks emerge: making housing more affordable and accelerating building, supported by a preferential mortgage program modeled on the Far Eastern mortgage initiative and officially launched on December 8.
The Arctic mortgage offers a preferential rate of 2 percent per year for housing purchases in the region. This program responds to rising base rates, helping to stabilize family finances and stimulate growth.
Concessional mortgages act as a catalyst for development by boosting housing demand, which is vital in the Arctic given logistical hurdles in construction. A steady demand reduces risk for developers and expands their planning horizons.
more quickly
Even before the official launch, the program gained banking momentum. VTB became the first bank to accept Arctic mortgage applications on October 24, with initial transactions in the Republic of Karelia, Krasnoyarsk Territory, and Arkhangelsk Region. The average loan size reached about 2.8 million rubles.
Georgy Gorshkov, Deputy Chairman and Chairman of the Board of Directors of VTB, stated that owning a comfortable home matters deeply for families living in challenging climates and that the bank acted quickly to provide access to favorable terms.
Severodvinsk resident Anastasia Pirogova was among the early applicants. She and her husband sought to move into a new apartment in a building under construction in Severodvinsk. The mortgage was initially quoted at 5.5 percent, with a long term that would keep payments manageable. Yet the plan proved financially burdensome for their family. After learning about the Arctic mortgage at a 2 percent rate, they discovered a shorter term that still fit their budget, making homeownership possible. They hope to move in soon.
Funding under the preferential program can be used for buying housing in the primary market, while residents of rural areas and single-industry towns may purchase homes in the secondary market. The down payment is at least 20 percent, and loans of up to 6 million rubles can run for as long as 20 years.