2022 housing market trends in Russia

Abstract

In the last two years, the housing market of Russia has been influenced by the powerful negative factors related to the COVID-19 pandemic and household income decline. In 2021 thanks to the state support and preferential mortgages the market situation improved; however in the first quarter of 2022 the powerful factor of geopolitical influence in the form of a monetary shock coupled with a financial crisis interfered with it. The relevant issue is what methods the market will use to cope with this shock and to what extent the state and the market will overcome it. In this paper, the authors review the main aspects of the Russian urban housing market development according to the 2021 results: 1) the price development in the primary and secondary markets; 2) indicators of new housing construction and commissioning; 3) the industry support from the state; 4) preferential mortgage programmes as well as the forecasted 2022 trends. This review results in a preliminary (with account taken of the unknown direction of development of the geopolitical situation) conclusion that, despite the predicted fall in GDP and real incomes in Russia, the recession of both primary and secondary housing markets will stop and by the end of 2022, the market will have gained positive momentum in terms of its turnover, while the dynamics of the nominal price level will stabilize at the level close to the inflation rate largely due to the influence of preferential mortgage programmes.