Apartment Market Trends: Current Performance and Future Predictions
Let's Talk Real Estate:
Russian Housing Market Trends, Unveiled!
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The buzz around housing prices, mortgage prospects, and market forecasts has been at the forefront for quite a while. But let me tell you, things aren't as black and white as some people might lead you to believe. Here's a lowdown of what's truly happening in the Russian residential real estate market, based on the insights from the DomClick service and the Sber's Financial Analysis Center's study in May 2025.
THE PRIMARY MARKET'S GOT GRIT
So when did we hear the inevitable collapse of the primary market? It ain't happening yet, despite high key rates and plummeting demand. In May, the average price per square meter on the Russian primary market still nudged up, albeit modestly – by 0.7%.
Now, even after eliminating bank commissions, prices didn't take a dive, as suggested by some media outlets. Quite the contrary – in Moscow and the Republic of Tatarstan, prices fell in April but rebounded in May. And guess what? Prices for new builds are barely inching upward, with a nominal increase of just 3.4% year-on-year since the "Mortgage Subsidies" program wrapped up.
Currently, the average square costs around 173,400 rubles. Check out the regional differences – in Moscow, it's a whopping 352,600 rubles; St. Petersburg, 255,100 rubles. But if you're looking for lower prices, head to areas like Penza Oblast (101,600 rubles) and Udmurt Republic (117,000 rubles), both almost half the price of the capital!
PRICES AREN'T ALWAYS EVEN
Now here's an interesting tidbit: housing prices aren't rising steadily across the board. The most significant price hikes in May were seen in the Nizhny Novgorod Oblast (3.4%), St. Petersburg (3.2%), Udmurt Republic (2.0%), Rostov Oblast (1.0%) and Kaliningrad Oblast (0.9%).
Quite the opposite, prices in regions like Penza, Novosibirsk, and Moscow, as well as the Krasnodar Krai, are dropping the fastest (-2.1%, -0.2%, and -0.1%, respectively).
SELLERS STICKING TO THEIR PRICES
Wanna know the real deal on apartment prices? Peep the paperwork from completed sales, not just ads. According to Domklik's data, there's still a rather sizeable gap between those figures.
Sellers are doing their best to hold on to the price and onlymake concessions during negotiations when they realize they won't sell otherwise. The most stubborn sellers of new housing can be found in Moscow, with the gap between the price in ads and real sales standing at a whopping 26.7%.
TOP 10 REGIONS BY PRICE PER SQUARE METER IN NEW BUILDS
Ready-to-move-in housing prices are edging up, though at a slow-but-steady pace. In May, the average cost per square meter country-wide leaped by 0.8% to 115,100 rubles. Since last May, secondary housing has climbed an average of 5%, while new builds have only increased by 3.4%.
Analysts attribute this discrepancy to the earlier hike in new builds prices, which started when favorable programs for primary real estate were rolled out. So, while new housing has been on a price spree for a while, the secondary market's playing catch-up.
The regions where the most expensive secondary housing can be found are, predictably, Moscow and St. Petersburg, with 308,000 rubles and 213,400 rubles per square meter respectively. The Moscow Region follows suit, with an average of 149,400 rubles, and the Krasnodar Krai comes in fourth, at 146,700 rubles. The lowest prices for ready-made apartments can be found in the Chelyabinsk and Saratov Regions, along with Perm Krai, with average prices of 77,900, 78,000, and 80,700 rubles per square meter respectively.
NO DECLINE IN SIGHT
The burning question on everyone's lips: What's next for housing prices? If we're talking about new builds, annual growth rates of prices on primary housing have been steadily dwindling, and the proportion of monthly sales hasn't surpassed 2% of the total construction volume for the past 10 months.
Sales volume of new housing dropped by a staggering 8% year-over-year in Q1 2025, but the sales value jumped by 9% year-over-year, indicating increased prices despite fewer sales. The gap between the offer price and the final sale price, which indicates a seller's confidence level, remains unchanged.
All this points to the possibility of prices staying the same or even dropping in the coming months. On the secondary market, despite an uptick in the number of deals, the gap between the asking price and the final sale price has shrunk again, and hasn't risen above 18% since the second half of 2023. In the long run, this creates an environment that encourages lower prices, analysts at Domklik suggest.
Oh, and there's an alarming sign for the market: more and more regions have been experiencing housing price drops for the past three months or more, both on the primary and secondary markets. Some regions have already reached the saturation point from the peak demand in mid-summer 2024 and have essentially returned to last year's levels. This is an ominous signal, indicating the risk of local crises in the housing construction industry. But for buyers, it's an opportunity to snag an apartment without breaking the bank.
Stay tuned, folks. Keep a watchful eye on this dynamic market!
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Enrichment Data:Overall: The current trend in housing prices on the Russian primary market in May 2025 shows a continuing increase, but with signs of slowing growth and heightened bubble risk. The Central Bank of Russia has raised concerns about the extended mortgage duration and skyrocketing mortgage interest rates, which could slow down the housing market in the long term. However, despite these warning signs, home prices in the primary market have escalated rapidly in early 2025, indicating an increased chance of a bubble. The UBS Global Real Estate Bubble Index placed Russia’s primary real estate market at a "high risk" level in April 2025, with an index value of 1.6, the highest since at least 2016, comparable to bubble risks in cities like Miami and Tokyo[1][2][5].
In terms of sales volume and price growth specifics, the Bank of Russia reported that in Q1 2025, new housing sales fell by 8% year-on-year, while the sales value increased by 9% year-on-year, suggesting rising prices despite decreased sales volume. Annualized price growth slowed to 7.3% for Q4 2024 – Q1 2025 as compared to 9.6% earlier in 2024. However, the price gap between the primary and secondary markets still remains substantial, with primary market prices being around 52-60% higher than secondary market prices[5].
Regarding regional performance, the data does not specify particular Russian regions with the most significant increases or decreases in housing prices for May 2025. However, the general national trend shows steep price increases in the primary market across major cities and regions, contributing to overall bubble risk warnings by the Central Bank. The secondary housing market remains stable or cooling due to high mortgage rates and reduced demand[1][2][5].
In summary:
- Trend: Rising primary market housing prices with signs of slowing growth; high bubble risk as per the Central Bank and UBS index.
- Mortgage context: Long-term mortgage loans with record-high interest rates but a slowed pace of mortgage issuance.
- Sales: Volume of new housing sales fell by 8% YoY, while sales value increased by 9% YoY in Q1 2025.
- Price gap: Large disparity between primary and secondary market prices persists (over 50% premium).
- Regional specifics: No explicit regional data available from May 2025; major cities likely seeing the most pronounced price increases.
This suggests a cautious market environment with overheating risks concentrated in new housing developments in larger urban centers, while the secondary market remains subdued[1][2][5].
- Despite high key rates and plummeting demand, the average price per square meter in the Russian primary market still saw a modest increase of 0.7% in May, indicating that the collapse of the primary market isn't imminent.
- Investors looking for opportunities should consider lower-priced regions like Penza Oblast (101,600 rubles) and Udmurt Republic (117,000 rubles), as their housing prices are almost half the cost of the capital city, Moscow (352,600 rubles).
