Russia confronts mortgage projects and housing prices in 2024
Elvira Nabiullina, the head of the central bank, suggested that prices for new-build apartments would rise sharply in 2023 because of government-backed mortgage programs. At the same time, she claimed there was stability in Russia’s housing market, implying that the sharp price increases would slow or stop altogether.
What exactly is a government-backed mortgage?
Russia has operated several state-supported mortgage programs since 2018. These schemes generally apply to housing under construction or to newly completed homes sold by developers. There are programs aimed at families, residents of the Far East, rural buyers, military personnel, and IT professionals. Some regions also run mortgage programs to aid public sector workers like doctors and teachers.
Typical rates run around 6% for family mortgages and about 5% for IT specialist mortgages. In 2020, housing demand collapsed during the COVID-19 pandemic, and many developers faced bankruptcy. Russian leadership responded by authorizing privileged mortgage options to stabilize the market.
Initially, approved borrowers could obtain a loan at 6.5% per year to buy an apartment in a new building. The terms shifted multiple times and the rate rose to 8%. The required down payment also grew—from 15% to 20% in September 2023, and to 30% in December.
In December, the maximum loan size for state-supported concessional mortgages for new builds was standardized at 6 million rubles across all regions. Previously, the capitals region and some other regions carried an upper limit of 12 million rubles.
Data from Domklik in January 2024 showed the average price per square meter in Russia’s primary market at 132,971 rubles, which means a 53 square meter apartment could cost about 7 million rubles. In the secondary market, the price per square meter stood at 106,530 rubles, making a 53 m2 apartment around 5.6 million rubles on average.
Ruslan Syrtsov, the general director of a real estate company, projected that 2024 would likely bring a halt to rising prices or a gentle decline in Russia’s housing market. He noted that the most probable outcome would be price freezes on some developments while others saw slower growth. In the secondary market, prices were expected to fall as buyers faced high mortgage costs. Meanwhile, owners of ready-made homes might curb supply and delay new purchases.
Maria Ermilova, a scholar and professor of finance at a leading economics university, observed more listings in both primary and secondary markets. She added that houses built under individual construction could compete with conventional housing, setting the stage for promotional pricing later in the season. She also pointed to the ongoing need for repairs, furniture, and delivery timelines as factors shaping buyer decisions.
Summer is often a slower period for real estate, but monitoring the market remains essential. Yuri Shedko, an economist and professor, predicted that prices could fall by up to 10% across Russia by the end of 2024, though the extent would vary by region and by the age of the building. He suggested that price declines might continue into early 2025, depending on local construction activity and renovation costs.
When is the best time to buy a flat?
Industry observers noted that the concessional mortgage scheme remained in effect through mid-2024, offering an option to purchase affordable apartments in new buildings. If a city offered stable prices and a 6 million ruble cap, a decent apartment was within reach for many buyers. While family and IT mortgage programs could change, early application was advised. In markets where old housing prices were already softening, buyers considered waiting for further declines before committing to a purchase, especially if they owned an existing home and could balance a sale with a new purchase.
Mortgages accounted for a large share of transactions in both the secondary and new-build markets. Some experts argued that buying without a loan was nearly impossible in practice, except when a seller accepted a similar-scale trade. High loan costs could complicate the sale of an older home, leading to greater use of exchanges and secondary-market arrangements with a small premium for faster settlements.
Discounts of up to 5% were common in negotiated deals, with larger concessions available in urgent sales. Projections suggested mortgage-backed purchases would remain viable in 2024 if prices declined, potentially bringing buyers to 76–82% of their previous spending capacity.
There is no universal rule for the right moment to buy a mortgage apartment. Each buyer must weigh liquidity, risk, and the trajectory of price changes, supply levels, and debt costs. Analysts emphasized that there are always liquid properties on the market, and as demand recovers, the best options tend to exit the market first. The prudent move is to buy when there is a real need for housing or a solid investment plan, all while considering future price trends and debt relief possibilities. A cautious approach now can shape future housing outcomes.
Experts warned that mortgage debt is only one piece of the puzzle. The best time to act depends on personal finances and market signals—deposit rates, mortgage rates, and the anticipated pace of price changes. Buyers were urged to evaluate their own needs, the risk of rising rates, and the likelihood of price stabilization before finalizing a purchase. The consensus was that timing should align with personal circumstance and market clarity rather than chasing a single forecast.