A Sign of Trouble Ahead: Housing Prices Dropping in Russia’s Largest Cities Despite Growing Populations

Paul Goble

            Staunton, Mar. 18 – Russians have traditionally put their money into real estate viewing it as the perhaps the safest defense against future shocks. Consequently, prices of housing per square meter, especially in the largest cities where population numbers are growing, are among the best indicators of where the Russian economy really is, official claims notwithstanding.

            That makes declines in such prices being reported for last month alone especially disturbing: In Kazan, prices fell by 0.8 percent; and in Moscow, by 0.3 percent; and in Ufa by 0.2 percent – monthly figures that point to annual declines of three to five percent or more (idelreal.org/a/tatarstanskie-traty-dlya-putinskoy-voyny-aysin-o-novyh-voennyh-rashodah-tatarstana/32864128.html).

            Smaller cities reported stable prices or even increases; but if what is happening in the largest and most rapidly growing cities which typically are bellwethers spreads, then Russians will not only be poorer but will feel so because their apartments and houses are where most of their money is tied up.

            And there is also the potential for some of them to find themselves “under water” as have owners in other countries, with their houses now worth less than they owe, a situation that has the potential to threaten the stability of the banks and force the Russian government to adopt a more interventionist approach, a difficult task given the demands for funding the war in Ukraine.