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The housing market in Russian cities and housing construction in 2021

Georgiy Malginov, Sergey Sternik and K. Kulakov
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Georgiy Malginov: Gaidar Institute for Economic Policy
Sergey Sternik: Moscow State University of Civil Engineering
K. Kulakov: Financial University

Published Papers from Gaidar Institute for Economic Policy

Abstract: In 2021, the situation on the Russian real estate market was mainly affected by factors that emerged in the initial period of the COVID-19 pandemic (state- subsidized mortgages, increased state support for developers) and trends that commenced to form in previous years (the expansion of the individual housing construction (IHC) segment as an alternative to blocks of flats (BF)). The growth of real disposable household income by more than 3%, while the government supported the industry and offered preferential mortgages, contributed to high demand for housing, especially in H1 2021. The desire to preserve family capital amid the record inflation rate (8.4%) and rising prices for all types of real estate encouraged Russians to be active on the housing market. In H2 2021, there was a decline in interest in mortgages. Housing lending commenced to shrink on the back of the gradual increase of the Bank of Russia key rate 8.5% by the end of the year against 4.25% at the beginning of the year. In addition, trends in the primary housing market were shaped by an increase in the cost of building materials and land, labor shortages, as well as the tightening of the program of concessional mortgage lending.

Keywords: Russian economy; residential property prices; housing market; housing construction (search for similar items in EconPapers)
JEL-codes: H82 K11 L32 L33 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2022, Revised 2022
New Economics Papers: this item is included in nep-cis and nep-ure
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Handle: RePEc:gai:ppaper:ppaper-2022-1211