New figures from the Global House Price Index have revealed that the cost of buying property in Moscow rose by a whopping 21.1% in the last year, putting the Russian capital into 7th place on the planet for annual price increases.
Moscow joins Saint Petersburg, the country’s second-largest city, which has been in the top 10 for some time and now sits in fifth place.
Published by Knight Frank, a London-based estate agency, the top of the list was dominated by Turkey, with Ankara, Izmir, and Istanbul taking the first three spots.
Price increases in Moscow (21.1%) and Saint Petersburg (25.4%) are far above the 5.6% average rise of the 150 cities analyzed by the company. Overall, 81% of the studied localities recorded an increase in prices.
According to the analysts, the demand for housing in Moscow didn’t slow down during the quarantine enforced to halt the spread of Covid-19, and was accelerated by low interest rates. In Saint Petersburg, the growth in prices was caused by demand not reducing while construction of new buildings ground to a halt.
“The positive dynamics became noticeable in the second half of the year, when the bans were lifted, and the pent-up demand was converted into deals,” said Olga Shirkova, the director of the company’s consulting and analytics department in Russia. On the whole, Russia (14%) saw the world’s fourth-highest growth in property prices, behind Turkey (30.3%), New Zealand (18.6%), and Slovakia (16%).
However, while the prices have risen in rubles, the US dollar values have not changed significantly, with the Russian currency losing around 15% of its value in 2020.
During the height of the Covid-19 pandemic, the Russian real estate market saw a boom as low interest rates and subsidized mortgages inspired more people to buy property. Earlier this year, the Bank of Russia revealed that the total bank portfolio of mortgage loans increased by 21.3% last year, with banks lending 4.3 trillion rubles ($56 billion).
“Against the backdrop of falling deposit rates, investments in real estate have become attractive once again,” Moody’s analyst Mikhail Shipilov told Reuters news agency. “You could say demand for real estate on the primary market is booming.”
The head of Russia’s Central Bank, Elvira Naibullina, also noted that there is cause to be particularly careful, although she does not believe that the country is in a housing bubble and supports the state’s preferential mortgage program.
“Currently, we can see no risk of overheating,” she said. “We should monitor housing prices very attentively.”
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