Mortgage in Russia has become more expensive than rent

Economist Maslennikov: “The trend is definitely correct”

The decrease in the availability of mortgages resulted in an increase in demand in the rental housing market. The trend began to gain strength in mid-August, when the Central Bank sharply raised the key rate. Accordingly, housing loan rates also shot up. Today, people prefer to rent an apartment for several months or even years rather than burden themselves with increasingly unaffordable mortgage interest rates. It looks like interesting times are ahead for the mortgage industry: the competitor in the form of rental housing has grown and matured.

After the first, July, increase in the Central Bank rate from 7.5% to 8.5% per annum, housing loans from the largest banks increased in price by 0.5-1%. After the second, in August, by another 2-3%. After the third – September – growth continued. But its scale is still unclear: too little time has passed since the Central Bank raised the rate to 13%. But in fact, now market, “non-preferential” mortgages are given at 13-14% – instead of 10.5-11% at the beginning of summer. At the same time, rental rates for housing in cities with a population of over a million increased by 15-20%. In addition to seasonal factors, demand was revived by relocants returning to the country and those citizens who changed their minds about buying apartments due to increased mortgage prices.

Accelerated inflation also played a significant role, from which the previous level of payments began to lag behind. And if four months ago one-room apartments in Moscow were offered to tenants for an average of 42 thousand rubles per month, two-room apartments for 72 thousand, now average prices are higher by 23% and 34.7%, respectively (52 thousand and 97 thousand rubles). In addition, according to realtors, over the past year the number of rental properties has decreased by more than 50%. Which also affects the cost, coupled with the factor of the weakening ruble.

However, all these circumstances do not negate the obvious fact: today rent is cheaper, more profitable, and more accessible than a mortgage loan. Against the backdrop of general economic uncertainty, with current inflation and wages, the population’s planning horizon has been reduced to three to five years. People don’t have an answer to the question of whether they will be able to afford their mortgage in seven to ten years. Not to mention fifteen to twenty years.

“The trend is definitely positive and correct,” says Nikita Maslennikov, a leading expert at the Center for Political Technologies. – We are talking about normalizing and balancing the structure of the housing services market. For many years, we had a bias towards mortgages, and insufficient attention was paid to rental mechanisms. In world economic history, in particular, the 18th century, the practice of building and operating so-called apartment buildings, which were rented out, is known. Rented housing is suitable for those who do not have the ability to service a mortgage loan, but who want to improve the comfort of their stay. First of all, these are young people and labor migrants.”

It is difficult to say how much this market shift towards rentals will adjust mortgage prices. Apparently, in the foreseeable future they will slow down rather for internal reasons – due to a drop in demand due to increased inaccessibility. Price excesses in this sector were largely provoked by government preferential programs, which at the same time created problems for the authorities associated with a lack of resources for subsidies.

For the next year and a half alone, approximately 460 billion rubles in additional budget funds have been allocated for these purposes, Maslennikov notes.

“Autumn is traditionally a high season on the rental housing market,” recalls Valery Tumin, director of Russian and CIS markets at Fam Properties. – Students are actively disassembling apartments near universities, which is especially noticeable in large cities, in such economic centers as Moscow, St. Petersburg, Kazan, Novosibirsk. At the same time, the holiday season ends: people switch to work mode, begin to go on business trips more often, and many Russians arrive in megacities from the regions. We should also not forget about “reverse” relocants.”

Nevertheless, Tumin does not regard what is happening as the beginning, the threshold of a long-term trend. According to him, part of the traditional autumn demand for rental housing was already realized at the end of summer, when the market was fueled by news about adjustments to preferential mortgage programs. Therefore, in the future, the demand for both the purchase and rental of apartments will naturally decrease, and then housing prices will adjust. Moreover, this will affect both “resale” and new buildings. Everyone is interested in selling square meters – developers, investors, and landlords.