Named the regions of Russia with the highest availability of buying a home in a mortgage

Yamalo-Nenets Autonomous Okrug leads in the rating of mortgage affordability in Russia

© RIA Novosti / Nina Zotina / Go to media bankReal estate transactions

Real estate transactions - RIA Novosti, 1920, 03.10.2022

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Real estate transactions. Archive photo
MOSCOW, October 3 – RIA Novosti. The rating of Russian regions in terms of affordability of buying housing on a mortgage was headed by the Yamalo-Nenets Autonomous Okrug, Magadan and Leningrad regions, and Ingushetia, Chechnya and Dagestan were at the bottom of the list, while housing affordability continues to grow, however, an increase in housing prices almost completely compensated for improvements in part mortgage lending, according to a study by RIA Novosti.
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Mutko: housing construction in Russia has tripled since 2000

Building Boom

According to experts, the construction sector in Russia has been doing well lately, housing construction is growing rapidly. At the end of 2021, 92.6 million square meters of housing were commissioned (excluding housing in horticultural areas), which is 12.7% more than the result in 2020 and is a new absolute record for Russia. At the same time, experts note that growth continued in 2022: 69.7 million square meters of housing have already been commissioned in eight months (an increase of + 33.3% compared to the same period last year).
On average, about 1.1 square meters of residential real estate has been built for each resident of Russia over the past 20 months, which, according to the compilers of the rating, is a good result by world and historical standards.
According to the study, good construction volumes have been observed for several years, and one can be cautious about a construction boom in Russia. The acute housing problem is gradually being resolved through new construction and the ability to buy housing with the help of a mortgage, which partially solves the main problem of acquiring housing – its high cost, however, experts specify that there are noticeable objective limitations.
To assess regional differences in affordability for families of buying housing on a mortgage, RIA Novosti experts conducted a study and compiled the eighth annual rating, which shows what proportion of families can afford to purchase a two-room standard apartment by taking a mortgage loan. As the rating results showed, accessibility parameters are very differentiated in the regional context.
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Preferential mortgage heated up the market

According to analysts, mortgage lending in Russia showed significant growth in 2021, which is mainly due to state support from various preferential programs. Last year, 1.9 million new mortgage loans were issued, compared to 1.8 million in 2020 and 1.3 million in 2019. Thus, the number of loans increased significantly and became a new absolute record.
At the same time, in monetary terms, the volume of mortgages issued for the year at the end of 2021 showed even more impressive growth. The annual volume of issued mortgages amounted to 5.7 trillion rubles, which is 28% more than in 2020.
In monetary terms, the growth was higher, as the average mortgage loan size grew rapidly. If in 2020 it was equal to 2.5 million rubles, then by the end of 2021 it is already 3 million rubles, and this year it has risen to almost 4 million.
There is also a further increase in the average loan term, which at the end of 2021 exceeded 240 months (20 years). For comparison, in 2018 the average term was 195 months (16 years and 3 months). Thus, an increase in the average loan size and an increase in loan terms increase the affordability of acquiring their own housing for Russian citizens.
The study notes that at the end of 2021, mortgage interest rates dropped significantly due to preferential programs. The average annual rate last year was 7.5%, which is about 2 percentage points less than in 2019. For the same reasons, in 2022, actual average rates continued to decline. In May of this year, the average rate was at the level of only 6.17%, which is a historical minimum. It is worth noting that in order to maintain demand, many developers began to subsidize rates for buyers and transactions with a rate of 2% and even 0.1% became common.
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Growing affordability of mortgages

As the rating shows, over the past year, the affordability of buying a home has increased in 44 regions of the Russian Federation, and decreased in 40. In general, in Russia, the share of families for which a mortgage is available increased over the past year from 32.7% to 32.8% in 2021 . Accessibility growth has been going on for four years in a row, although, according to experts, the conditions in them were very different. There were periods of rising rates and lowering them, there was an acute phase of the pandemic, and real estate prices sometimes grew very strongly, but the growth of the mortgage market and the increase in salaries compensated for the negative points, analysts explain.
According to the study, 17 regions increased affordability by more than 3 percentage points over the past year, while another 17 regions saw increases ranging from 1 to 3 percentage points. In many ways, a large increase is associated with a moderate dynamics of real estate prices against the backdrop of lower rates, growth in loan terms and rising wages, analysts explain. At the same time, the share of families for whom the purchase of an apartment with a mortgage is available has decreased by more than 1 percentage point in 32 regions.

Leaders and outsiders

As the results of the rating showed, the greatest opportunities for buying an apartment on a mortgage are open either for regions with a significant proportion of families with high salaries for workers (this brought the Yamalo-Nenets Autonomous Okrug, the Khanty-Mansiysk Autonomous Okrug – Yugra and the Nenets Autonomous Okrug to the first positions) , or for regions with low housing prices (Magadan Region, Leningrad Region and the Komi Republic).
The Yamalo-Nenets Autonomous Okrug leads the ranking in terms of affordability of mortgaged housing, almost 77% of families can afford to buy a typical two-room apartment in this region. In the Magadan region, which is in second place, about 63% of families have access to buying a home with a mortgage. At the same time, slightly more than 50% of families occupying the third, fourth and fifth places in the Leningrad Region, the Khanty-Mansiysk Autonomous Okrug – Yugra and the Nenets Autonomous Okrug can purchase an apartment on a mortgage.
According to experts, the leadership of the northern regions is natural: high salaries and a large amount of housing stock determine relatively low real estate prices. The Leningrad region boasts a very high rate of construction, which leads to good results in terms of housing affordability.
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According to the study, in addition to the leaders, another 12 regions showed availability in the range of 40-50%. It included: the Komi Republic (50%), the Sakhalin Region (49.3%), the Kamchatka Territory (48.6%), the Murmansk Region (48.5%), the Tyumen Region (47.6%), the Chelyabinsk Region ( 45.5%), Orenburg Region (44.5%), Vologda Region (43.9%), Republic of Sakha (Yakutia) (42.6%), Kemerovo Region (42.4%), Krasnoyarsk Territory (41, 2%) and the Irkutsk region (40.4%).
St. Petersburg (33.2%) took 38th place in the rating, however, experts note a decrease in affordability in recent years due to the rapid growth in apartment prices. Moscow, in the current ranking, dropped to 71st place due to the rapid growth in the cost of square meters. Both major cities illustrate a situation where improved mortgage conditions lead to outpacing growth in housing prices and housing affordability is not growing, but rather falling, analysts explain.
Despite the fact that in most regions the availability of mortgages is at a satisfactory level, in 7 regions less than 15% of families can purchase a typical “kopeck piece” in a mortgage, analysts say.
The rating is closed by the Karachay-Cherkess Republic (13.5%), the Republic of Crimea (13.1%), the Kabardino-Balkarian Republic (11%), the Republic of Tyva (10.4%), the Republic of Dagestan (9.2%), the Chechen Republic (9.1%) and Republic of Ingushetia (7.1%).
Experts note that the regions from the end of the list, represented mainly by national republics, are traditionally characterized by a large average family composition in them, which determines the low adjusted family income after deducting the subsistence minimum for each family member, as well as the low level of official salaries.
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According to the observations of experts, in the last seven years, the availability of mortgages has greatly increased, and this is reflected in the number of mortgage loans. According to analysts, in 2022 and 2023 one can count on the continued growth of the mortgage market, however, most likely, rates will not drop much.
“Firstly, preferential state mortgage programs may somewhat reduce their scale. Secondly, inflationary risks will not allow the Central Bank to reduce the refinancing rate to record levels at the end of 2020 and early 2021, thus, the market rate will remain in the range of 7-9% per annum “, – the explanatory note to the study says.
In the medium term, affordability can be expected to grow faster in regions from the bottom of the rankings. At the same time, in many rich leading regions, supply will follow demand, and real estate prices will eat up both wage growth and improved mortgage conditions, experts conclude.

How the rating was calculated

The study was prepared by RIA Novosti experts based on data from the Central Bank and Rosstat.
The indicator of mortgage affordability in the rating is the proportion of families that can make a monthly mortgage payment and carry out daily expenses. This share was estimated on the basis of the distribution of employees by salary in each region.
The loan amount is calculated for a two-room apartment of average quality with an area of ​​60 sq. meters in your region with a down payment of 30%. Family income from employment took into account the payment of personal income tax and adjusted in accordance with the regional subsistence minimum for each family member. It was assumed that 70% of the funds remaining after subsistence minimums were deducted from the family budget went to paying the mortgage, 30% to other expenses.
The analysis was carried out independently for nine types of family composition. The resulting share is defined as the weighted average of these nine types. Families in which at least one person has a job are considered. Average prices for apartments in the secondary market, loan terms and interest rates are taken from the official statistics of each region. For the calculation, data for 2021 was used, for comparison – for 2020.
Chukotka Autonomous Okrug is not included in the rating due to lack of relevant data.
Rating of regions by the affordability of buying housing for families in a mortgage

Rating of regions by the affordability of buying housing for families in a mortgage

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