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2 Jun, 2021 11:58

Russia enters global top ten for house price growth, with real estate values shooting up as elites bring money home from abroad

Russia enters global top ten for house price growth, with real estate values shooting up as elites bring money home from abroad

With properties changing hands for more and more cash, and a fast-growing real estate sector, Russia is now among the top ten nations for rising house prices, overtaking historic safe bets for investors such as the United Kingdom.

A study published by London-based property giant Knight Frank on Wednesday found that Russia's house price growth had picked up pace in the first quarter of 2021, rising by 11% compared to the same time in the previous year.

The rise puts the country ninth in the world, above nations like the United Kingdom, which was in 12th place with a 10.2% growth, and Germany, which was down to 20th place with 8.1%. Turkey topped the list, with house prices seeing an astonishing increase of almost a third over the same period.

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Olga Shirokova, the director of research and consultancy at Knight Frank in Russia, said she believed the rise was down to high demand, driven by preferential mortgages and low borrowing rates.

Also on Wednesday, the head of Russia's Rostec state corporation said that wealthy Russians were divesting of their interests overseas and putting more of their money back into their home country. Those with business and political links, he claimed, “are returning their capital to Russia,” with tough rules prohibiting senior public servants and others from holding assets abroad.

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Earlier this week, consultancy firm SRG revealed that the cost of housing in Moscow on the secondary market had risen by a third since 2017. In St. Petersburg, Russia's second city, the growth was more dramatic, with prices almost doubling in the same period.

Housebuilders in the West have bemoaned a construction boom in Russia as the reason behind rising prices for timber and scaffolding boards. Moscow dominates the export market, but is increasingly using wood products at home to meet growing domestic demand, which in turn is having a knock on effect in world markets.

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