The Arctic land area spans about 5 million square kilometers, representing roughly a third of the country. The Russian Arctic runs along the Arctic Ocean coast and spans parts of nine regions, including Murmansk and Arkhangelsk, Yamalo-Nenets, Nenets and Chukotka Autonomous Okrugs, Krasnoyarsk Territory, Sakha Republic (Yakutia), Komi, and Karelia.
In this vast expanse, the people are the most valuable resource. The development of this remarkable region—rich in resources and impressive in scale—depends on its inhabitants. Since 1989 the population has fallen by about a third, a challenge that currently limits long-term growth. Today, about 2.5 million people live in the Arctic.
By 2020, Arctic development became a strategic priority for the nation. State support measures play a crucial role, given the extreme climate, vast distances, and the dispersal of communities 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 implement this strategy, a State Program on Social and Economic Development of the Arctic was launched.
Unprecedented steps were 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 in 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 illustrate progress under the new development framework.
According to Rosstat, the average monthly salary in the Arctic in 2022, excluding small businesses, exceeded the national average, reaching nearly 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 penetration just above the national average. If the overall rate is 85.5 percent, the Arctic enjoys 87.3 percent connectivity.
The Arctic Development Strategy highlights the priority of 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 hinges on housing, and the Arctic region presents a mix of stark contrasts. Some communities face depopulation, while others grow more comfortable yet face 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 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 consumer finances and stimulate growth.
Concessional mortgages perform 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 drew 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.