housing rental prices have risen sharply over the past year
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In conditions of restrained housing commissioning, continued migration of the population to large cities, changing demographic behavior, the return of relocants and the development of tourist housing, the key trends in the long-term rental market have become a shortage of supply and a prolonged rise in prices. In 2023, the cost of rental apartments in the country’s largest regional markets increased by almost a quarter. And the seasonal lull in December-January this season lubricated the decrease in the affordability of purchasing housing, which pushed additional demand into the rental market. Analysts do not see any prospects for price reductions in the near future.
The average cost of renting one-room apartments in the 18 largest regional markets of Russia (16 cities with a population of over a million, Moscow and Leningrad regions) at the end of 2023 amounted to 27 thousand rubles. per month, two-room apartments – 39.5 thousand rubles. Over the year, the figures increased by 25.8% and 24%, respectively. In the last month of the year, the indicators remained rather stable: “one-room apartments” rose in price by 0.3% compared to November, “two-room apartments” – by 0.5%. Such data is provided in Cyan.Analytics. According to Etazhi, one-room apartments in cities with a population of over a million cost an average of 25.2 thousand rubles at the end of December. per month, two-room apartments – 30.6 thousand rubles. Year on year, the figures increased by 19.9% and 18.9%, respectively. Over the month, analysts noticed an increase in the average value by 2.8% for one-room apartments and by 3% for two-room apartments.
Most pronounced growth the average cost of renting one-room apartments, according to Cian.Analytics, has increased In Perm, where the rate increased by 51.7% year-on-year, to 26.7 thousand rubles. per month. In Chelyabinsk the dynamics was 48%, up to 22.5 thousand rubles. per month. In Novosibirsk — 31.8%, up to 27.8 thousand rubles. per month. In “Etazhi” they add that “one-room apartments” In Nizhniy Novgorod over the year the price increased by 30.8%, to 24.9 thousand rubles. per month. Dynamics in St. Petersburg analysts estimate at 28.4%, up to 32.9 thousand rubles. per month.
Origins of growth
Throughout the year, the long-term rental market was under pressure from fundamental factors contributing to a lack of liquid supply. Among them, the head of Tsian.Analytics, Alexey Popov, includes the modest growth rate of annual housing commissioning: “In the ten largest regions, the figure over the past five years has grown by only 18%, to 26 million square meters. m”. At the same time, the population continues to concentrate in the largest agglomerations, where, due to changing demographic behavior, more and more apartments are required. “Children leave their parents earlier, give birth to their first child later, and live alone more often,” he argues. In 2023, additional pressure on the long-term rental market, according to Mr. Popov, was created by the return of relocants and the abandonment of the practice of remote work. Olga Pavlinova, director of the Etazhei rental department, calls another factor the development of the short-term housing rental market due to the growth of domestic tourist flow: some of the apartments came out of long-term exposure and began to be rented out to tourists.
At the same time, the availability of a mortgage for purchasing your own home is declining both in the primary and secondary markets – due to this, the demand for rental remains high, despite the seasonal decline in activity, says Olga Pavlinova, director of the rental department at Etazhey.
But the same trend, according to her, contributes to the growth of exposure: sales of apartments on the secondary market have slowed down and owners often decide to rent them out. The expert believes that in December alone, the volume of long-term rental supply increased by 10–15%, although there are not many liquid options on the market. The head of Cyan.Analytics, Alexey Popov, says that at the end of the year the number of available lots increased by 13% per month. The activity of potential tenants in December, according to him, was 12% lower than in November.
Capital deficit
In Moscow, according to Cian.Analytics, the average cost of renting a one-room apartment at the end of last year was 54.2 thousand rubles, a two-room apartment – 98.2 thousand rubles. Over the year, the values increased by 26% and 41.7%, respectively. Although at the end of the year the average price of a one-room apartment fell by 2% per month. Oksana Polyakova, deputy director of the rental department of the Inkom-Real Estate company, recalls that in the capital’s market demand began to grow noticeably back in March, and in April-May it exceeded last year’s figures by 17–20%. Thus, there was a shortage of budget proposals, which became acute by the summer: demand exceeded supply twice as much. The total volume of supply for 2023 in Moscow, according to Ms. Polyakova, decreased by 66%. Seeing the trends, landlords are striving to raise rates, but discounts are not currently provided, the expert notes.
In the high-budget rental segment in the Moscow market, according to Vladimir Rodionov, head of the Apple Real Estate rental department, there was a progressive increase in demand: in the first quarter, activity increased by 2% year-on-year, in the second – by 15%, in the third – by 32%, in the fourth – by 50%. The number of available options, according to the expert, decreased three times year-on-year and by 10% by the end of 2021.
Against this background, Mr. Rodionov continues, landlords have become less loyal to the owners.
A similar trend is observed in the economy class segment, where tenants, according to Ms. Pavlinova, are also actively expanding the geography of their requests: they agree to locations more distant from the center, trying to save money. Oksana Polyakova calls apartments with rental rates of 30–38 thousand rubles the most budget-friendly in Moscow. per month, located in the areas of Nekrasovka, Kuzminki, Novogireevo, Teply Stan and Losinoostrovsky.
Stable increase
Olga Pavlinova expects stable demand from tenants at the beginning of the year and a continued increase in average rates against this background. “The scenario with the resumption of growth in rates after the lull around the New Year seems to us the most likely,” agrees Mr. Popov. The expert suggests that more and more people will choose to rent due to the decreasing affordability of buying a home. Due to a noticeable increase in rental rates over the year, potential tenants in general, according to Ms. Pavlinova’s observations, are more often willing to consider locations remote from the central areas of cities, trying to save money.
Although Oksana Polyakova notes that on the housing purchase and sale market last year there were quite a lot of investment transactions in both the secondary and primary segments. Some of these proposals, according to the expert, will enter the rental market, ensuring an increase in exposure. Based on this, the expert expects the market to stabilize. Vladimir Rodionov also predicts an increase in exposure, but despite this, he also expects that the average cost of high-budget hiring in 2024 will increase by 10%.
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