If from 2006 to 2019, housing affordability in our country as a whole only grew, then in 2019 it began to fall, and so far it has not been possible to reverse the all-Russian trend. Although the situation varies greatly from region to region
Since 2006, Russian housing in general has become more and more affordable for the population. This trend continued until 2019, but over the past few years there has been a decrease in housing affordability in the country, and so far it has not been possible to reverse the trend. This is the conclusion reached by the study “Housing Affordability in cities, urban Agglomerations and regions of Russia”, which was conducted by the Institute of Urban Economics Foundation (IEG) in partnership with Sberindex and Yandex Real Estate.
“The assessment is based on the housing affordability coefficient (KJ) calculated by the IEG in relation to the subjects of the Russian Federation and Russia as a whole. It shows how many years a conditional household of three people with average per capita income will be able to accumulate funds (provided they save all their income) to buy a standard apartment with an area of 54 square meters, based on the average price per square meter of total area according to Rosstat. The KJ shows the fundamental affordability of housing (that is, the ratio of housing prices and household incomes) and does not take into account the current conditions of mortgage lending,” the authors of the study explain.
According to international practice, housing is considered affordable at a coefficient of 3 and below, not very affordable — from 3 to 4 inclusive, with an indicator from 4 to 5, housing acquisition is seriously complicated, and at a level above 5 housing is significantly inaccessible. So, if in 2006 the KJ was 4.6 in our country, and in 2007 and 2008 even 5.3, then by 2019 it had decreased to 3.2, that is, almost to the border of the “affordable” category. However, then the coefficient began to grow again and last year it reached 3.9, and at the moment it is at 3.7.
A little more, and Russia will again fall into the extremely unpleasant zone of “housing acquisition is seriously complicated.” However, in comparison with 2006, everything, of course, looks great: then only 18.6% of families could buy the apartment described above with their own and borrowed funds, in 2023 — 54.5%, and the peak in the entire history of observations fell in 2022 — 56.3%.
One of the patterns revealed in the course of the study and looking more than obvious is that the closer to large cities and agglomerations, the less affordable housing is. At the moment, the regions with the most affordable housing are Yamalo-Nenets Autonomous District, Chechen Republic, Magadan Region, Kamchatka Territory, Khanty-Mansiysk Autonomous District, Tyumen Region. And Moscow, Amur, Kaliningrad, Irkutsk regions, Altai Territory and St. Petersburg are the leaders in the inaccessibility rating.
In addition to the housing affordability coefficient, two more indicators were used in the study: the housing affordability index (LPI), and in fact, the index of the availability of the mortgage loan itself, and the affordability of housing with a mortgage (DS). Combining and analyzing all three indicators gives a slightly different picture and allows you to divide the regions of the country into four groups.
The first category includes the subjects of the Federation, in which housing affordability decreased in 2023 in accordance with the values of all three indicators. This is one of the smallest groups, consisting of only 13 regions: Magadan, Smolensk, Kurgan, Novosibirsk, Arkhangelsk, Omsk, Chelyabinsk regions, the republics of Dagestan, Kalmykia, Komi, Mari El, Altai and Chuvashia.
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The second group consists of regions in which, on the contrary, housing affordability increased last year in accordance with the values of all three indicators. These are 30 subjects of the Russian Federation, including St. Petersburg, the Republic of Tatarstan, Primorsky Krai, Irkutsk, Kaliningrad and Nizhny Novgorod regions.
Group number three (the most numerous) was formed by 33 regions in which housing affordability increased in terms of KJ, and decreased in terms of DS and IDP, taking into account the impact of mortgages. This group includes, in particular, Moscow, the Moscow and Leningrad regions and the Krasnodar Territory.
Finally, the fourth group is a single Yamalo—Nenets Autonomous District, which is the leader in most of the considered indicators of housing affordability and mortgages. Here, over the past year, the value of KJ has decreased, the value of IDP has increased, and the value of DS has practically not changed. That is, in general, we can talk about an increase in the availability of housing and mortgages in the region.
Discussing how to prevent a critical decline in housing affordability, the authors of the study note: currently, it is especially important when choosing measures to support housing construction, first of all, to assess the possible impact of such measures on housing prices. And apply only such measures that do not contribute to price increases.
“It seems to us extremely important to focus on the development of various forms of affordable housing, which are in great need today. In small towns and rural areas, it is important to support the development of low—rise residential buildings, and in large and large cities – the development of hired housing stock for social use and housing cooperation in the construction of apartment buildings. In addition, in order to improve the quality of individual housing construction and the comfort of permanent residence in such houses, significant support for infrastructure support for development is required,” experts emphasize.
In their opinion, “anti-inflationary policy measures in housing markets aimed at limiting price increases, reducing costs and increasing labor productivity in housing construction, stimulating increased competition between developers, including by reducing barriers to entry for new construction companies, increasing transparency and the certainty of business rules, in particular the establishment of transparent and clear rules for determining the infrastructure obligations of housing developers.”
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