The appetite for buying small Moscow apartments with a mortgage has cooled significantly, dropping roughly one and a half times from the spring of 2023. Industry voices point to two main culprits: the end of concessional loan programs and climbing housing prices. This assessment comes from NSN with comments attributed to Irina Radchenko, Vice President of the Mortgage Academy, who outlines how these shifts reshape buyer behavior for urban micro-terrains.
Developers are still pushing what has been termed as compact detached housing, typically under 28 square meters, but the market response is cooling. High loan rates have become a drag, and data from January 2024 show that only about one in three mortgage applications received approval, signaling tighter lending constraints. Analysts note that many borrowers in 2023 spent around 80 percent of their income on mortgage payments, a ratio that flags a systemic vulnerability in consumer finances when rates rise or incomes stagnate.
Radchenko argues that removing concessional mortgages marks a measured move that reflects fiscal prudence. She highlights the cost to taxpayers involved in backing banks during periods of losses and suggests that the policy previously favored developers at the expense of broader economic resilience. The analogy of antibiotics not being stopped in time captures the concern that the policy, while beneficial in the short term for developers, produced unintended side effects that could outweigh its benefits as conditions changed.
Looking ahead, the economics of housing in Russia show little room for a quick drop in prices. Inflation remains elevated, and a large share of new housing has relied on project financing, a factor that tends to anchor pricing and complicate market corrections. As mortgage rates remain a significant barrier, overall demand for apartments continues to decline, underscoring a trend where affordability and access to credit shape buyer decisions more than ever before.
There is also a broader pattern at play in Moscow and other major cities: the average size of newly constructed homes is evolving, reflecting shifts in planning and financing that influence what kind of homes buyers actually seek. Authorities in Moscow previously signaled a shift away from studio layouts under 28 square meters, signaling a recalibration of what is considered practical living space in a city with high living costs and dense urban envelopes. This strategic stance aligns with evolving consumer preferences and the financial realities of a mortgage-heavy market, where monthly payments substantially determine demand and choice.
In sum, the mortgage landscape in Russia is undergoing a notable recalibration. The combination of fading concessional support, rising loan costs, and a cautious lending environment is reshaping demand for compact urban homes. Buyers are weighing the long-term costs of ownership more heavily, while developers adjust to a market where financing terms and price levels sculpt the spectrum of available options. As the market adapts, the emphasis remains on sustainable affordability and prudent investment, rather than shortcuts that may compromise long-term stability. The ongoing conversation among industry professionals underscores the importance of balanced policy that supports housing access without inflating risk for households and lenders alike, a balance that will guide the next phase of urban housing in Russia.
Notes: The observations reflect ongoing analyses by industry experts and authorities tracking the mortgage market dynamics, housing supply, and policy impacts as of today, with attribution to the Mortgage Academy and related market assessments.