High mortgage rates are driving demand in the rental market
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The seasonal cooling of demand in the long-term rental market has not yet led to a decrease in prices. One-room apartments in the largest regions, on the contrary, increased in price by an average of 1.6% per month. Budget options continue to quickly disappear from the exhibition, which has shrunk during the high season. They are actively rented by tenants who have decided to postpone the purchase of their own home due to rising mortgage rates. Servicing a loan is now on average twice as expensive as renting an apartment.
The average cost of renting one-room apartments in the 18 largest regional markets in Russia (16 cities with a population of over a million, Moscow and Leningrad regions) at the beginning of November amounted to 26.8 thousand rubles. per month, two-room apartments – 40.5 thousand rubles. Over the past four weeks, the values have increased by 1.6% and less than 0.1%, respectively, as calculated by Cyan.Analyst. The company talks about a mild seasonal cooling of the market. It was also noticed in Avito Real Estate: according to analysts, on average in Russia a rental apartment now costs 27 thousand rubles. per month – almost 7% cheaper than in October. Although, according to calculations by Etazhi, one-room apartments in cities with a population of over a million cost an average of 23.4 thousand rubles. per month, “kopeck piece” – 29 thousand rubles. Over the month, both values increased by 3.8%.
The most pronounced price increase for the rental of one-room apartments, according to calculations by Cian.Analytics, over the past month there has been in Rostov-on-Don. The average figure increased immediately by 8%, to 27.1 thousand rubles. per month. But at the same time in Krasnodar the value decreased by 4%, up to 25.8 thousand rubles. per month. Decline by 3% analysts recorded in Krasnoyarsk and Samara – up to 23.6 thousand and 23.5 thousand rubles. per month accordingly. Etazhey experts note increase average cost of a one-room apartment in Ufa by 5.5% by the beginning of October – to 20.4 thousand rubles. per month. In St. Petersburg, according to their calculations, the average rate over the same period increased by 3.7%, to 31 thousand rubles. per month.
In Moscow renting a one-room apartment, according to Cian.Analytics, now costs an average of 54 thousand rubles. per month, two-room – 101.6 thousand rubles. Over the month, values increased by 3% and 4%, respectively. Oksana Polyakova, deputy director of the rental department of the Inkom-Real Estate company, records a gradual decrease in the activity of tenants: in October, requests from them were 10% less than in September, and 20% less than in August. But the trend cannot yet have a significant impact on pricing. Since the beginning of August, the number of lots on display has almost halved and is now at a 30-year low, the expert explains. Mrs. Polyakova reminds that in winter demand is traditionally inactive and by spring, with the beginning of a slight revival, potential tenants will probably have plenty to choose from. Vladimir Rodionov, head of the “Rent” department at Apple Real Estate, adds that in the rental segment of high-budget housing, seasonality is less obvious. New and liquid lots here, in his opinion, continue to rise in price.
In general, in the country’s 18 largest regional markets, the number of vacant apartments in the long-term rental segment over the past four weeks has increased by 2% compared to the previous similar period, says Alexey Popov, head of Cyan.Analytics. The growth occurred for the first time in six months and, according to the expert, indicates a reduction in real demand. The head of the long-term rental category of Avito Real Estate, Konstantin Kamenev, speaks of a decrease in user activity for the month by 14.5%, with a year-on-year increase of 4.7%. “Based on the results of October, we see that in cities with a population of over a million, demand is declining faster than supply,” he says.
Although the seasonal decline in demand is probably still below expectations. “It is fueled by those who planned to purchase their own home, but did not have time before the mortgage rates increased,” explains Olga Pavlinova, director of the rental department at Etazhey. The activity of such tenants leads to the erosion of budget offers and, accordingly, an increase in average prices.
Ms. Pavlinova notes that owners, seeing continued demand, are trying to rent out their apartments for as much as possible.
“Although there are already those who are ready to make a discount after two or three months of residence, so as not to lose tenants in the future if more affordable options become available,” she adds.
Although high mortgage rates may support the rental market in the future. “The next meeting of the Central Bank led to a local increase in potential demand: users are monitoring the market, comparing options in different segments, before deciding whether to take out a mortgage or stay on the rental market for now,” says Mr. Popov. According to expert calculations, the average rent payment is now almost half the servicing of a 15% mortgage. This, in his opinion, will contribute to the flow of potential demand into the hiring segment in the long term. But in the short term, he does not exclude a seasonal decline. Olga Pavlinova expects prices to continue to rise moderately, by 1–2% per month. Oksana Polyakova does not rule out that during periods of low activity, in late autumn and winter, owners will be ready to offer a 5-10% discount to attract tenants.
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