The cost of renting housing in Russia has shown record low growth

The annual increase in the average cost of renting one-room apartments in Russia for the first time in the last five years did not exceed 2%. This was reported to Izvestia on November 29 by the federal company Floors.

"After a record last year, when the average cost of renting one—bedroom apartments in Russia increased by 38.4% and two-bedroom apartments by 34.1%, this year there was a rather sharp cooling in price dynamics, as a result, average annual rates increased by only 1.8% and 5.2%, respectively," said the director of the rental department of the federal the company "Floors" Olga Pavlinova

In her opinion, the main reason for such a sharp decline in growth dynamics is the increase in the supply volume on the rental market. In most of Russia's largest cities, the number of apartments for rent increased by 30-40% over the year.

"On the one hand, apartments that were rented by those who purchased housing on preferential mortgages in houses under construction began to be released, on the other hand, the supply increased significantly due to an increase in the sale time on the secondary market, which is why many sellers began to rent out their apartments simultaneously with the search for buyers. Plus, more and more apartments are being rented, which were purchased on the wave of cheap mortgages for investment purposes," Pavlinova said.

The expert noted that it is most difficult for owners in small towns to maintain the previous rental rates, where the dynamics of supply growth significantly outstrips demand. The situation is more stable in megacities, but even among them there are cities where average annual rental rates have shown negative dynamics.

"Average rental rates are decreasing, among other things, due to the restoration of the supply structure in the market — the share of budget housing options is growing, which has been minimal over the past few years," explains the director.

According to estimates by real estate experts of the federal company "Floors", the average rental rates for one-room apartments for the year among the cities with millions decreased the most in Volgograd (-6.9%), St. Petersburg (-5.6%), Samara (- 4.1%), Voronezh (-3.5%), Rostov-on-Don (-1.3%) and Chelyabinsk (-1.1%). The minimum growth was recorded in Krasnodar (+0.6%), Kazan (+2.7%) and Novosibirsk (+2.9%).

Ufa (+6.9%), Perm (+6.7%) and Moscow (+6.1%) are among the three leaders in the growth of average rental rates for one-room apartments. In the segment of two-room apartments, the situation is more stable, with average rental rates falling over the year only in Voronezh (-2.8%) and Yekaterinburg (-1.1%). The maximum growth was recorded again in Ufa (+11%). In Moscow, it was only 4.2%.

"There are no factors for the growth of average rental rates in the medium term, and they will continue to adjust, which may provoke existing tenants to look for more comfortable but affordable rental housing. The first wave of such demand may begin early next year," the expert concluded.

On November 28, Consultant on strategic and anti-crisis management, CEO of OOO "Together.Olesya Berezhnaya told Izvestia that in modern conditions, the choice between renting and buying housing requires an individual assessment and depends on the financial capabilities of the family and its long-term plans. The key factor is not the dream of having your own walls, but the real ability to service obligations. In a situation where buying a home turns out to be financially unaffordable, a reasonable solution may be to choose a comfortable lease that allows you to make a down payment in parallel.

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