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In October 2023, new-home prices across Russia rose by 4.7% year over year, reaching an average of 142.7 thousand rubles per square meter. This figure comes from the latest data compiled by SberIndex and Domklik on actual mortgage transactions in various Russian regions. The numbers reveal a broad uplift in the capital costs of new housing and lay the groundwork for understanding how the mortgage market is evolving in the wake of policy and rate shifts.

Overall, prices for second homes climbed by 8.1%, while month-to-month changes stood at 2.2% for new buildings and 1.4% for secondary properties. Market analysts point to a renewed momentum in monthly price growth for both new and existing housing, noting that the pace has returned to levels not seen since the spring of 2022. This upturn reflects robust demand dynamics and the lingering impact of accumulated price inertia in the sector.

What stands out is the stronger price acceleration in the primary market compared with the secondary market for the third consecutive month. Across 70 regions, new-building prices increased during the month, with 56 of them reporting record-high levels. The breadth of this surge underscores a nationwide trend rather than localized spikes, indicating broad supplier pressure and shifting buyer expectations in the current cycle.

Mikhail Matovnikov, Senior General Manager and Director of the Financial Analytics Center, noted that tightening financial conditions for both primary and secondary mortgages have spurred a surge in demand driven by expectations of higher rates and the potential implementation of new restrictions from the regulator. He highlighted that mortgage activity in August through October 2023 reached levels not previously seen in the Russian market. September originations were about 37% higher than December 2022, and October is expected to surpass December 2022 as well, though likely not matching the August–September peak of 2023.

Alexey Leypi, manager of Sberbank’s Domklik department, pointed to several notable shifts in the housing loan landscape in recent months. The Central Bank raised the key interest rate to 15%, the government introduced a higher minimum down payment for basic preferential programs to 20%, and a new wave of macroprudential measures affecting housing loans took effect in October. Leypi believes these moves will cool the market considerably, reflecting a deliberate policy course aimed at tempering demand to align with available supply and credit risk considerations.

According to Leypi, mortgage issuances have begun to ease from the August–September highs, yet price rises persist due to inertia. The dynamics of new loan originations are still moderating, allowing prices to stay elevated as buyers adjust expectations. Analysts anticipate a shift in the price trajectory if the supply of pre-approved applications contracts and demand softens further. One potential channel for price adjustments is a reallocation of buyers toward more affordable segments, including the individual housing construction market, which could temper overall price momentum in the near term.

These observations emphasize how macroeconomic factors, regulatory policy, and evolving credit conditions interact to shape both the pace and direction of housing prices in Russia. The ongoing balance between demand, supply, and financing costs will likely determine the sustainability of price gains across regions and the relative strength of the primary versus secondary markets in the coming months, while keeping a watchful eye on policy moves that could redefine affordable home ownership for buyers in different income cohorts.

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