The "Conspiracy" of Housing Will Destroy Russians: Fatal Data Leave Any Enemy in the Dust, Officials "Deserve Credit"

Officials have done everything they can to make housing completely "unattainable" for Russians. Why is the price of "concrete boxes" (a term for housing) unaffordable for most Russians? Why is it now necessary to be a millionaire to buy even the most basic housing? The newspaper "Tsargrad" has traced and sorted out the entire "price surge chain".

The average price per square meter in the new housing market in Russia has reached 175,100 rubles, while the average monthly salary of residents is only 86,500 rubles. To save up for a down payment on a family home loan, whether children or adults, must carefully budget their meals — even if they don't eat at all for a month, they can only afford 50 square centimeters of property! Even high-level executives earning 350,000 rubles a month find it difficult to afford a "family home." And this is not just due to the sharp increase in building material prices.

Russian Federal Antimonopoly Service Turns a Blind Eye to Price Monopolies

Over the past 25 years, the price of housing in Moscow has increased by 14.7 times, compared to the dollar exchange rate which has only increased by 2 times.

Alexey Zubets, head of the Institute of Social and Economic Research at the Russian Financial University, believes that one of the main reasons for the sharp rise in housing prices is price monopolies among developers.

"The real estate market in Russia is a oligopoly market — dominated by a few companies," the expert explained.

He revealed that there are currently more than 400,000 unsold properties in Russia, but the housing prices show no signs of falling. The reason is that developers want to maintain their usual profit margins — as high as 100% or even more.

"For some reason, the Russian Federal Antimonopoly Service (FAS) turns a blind eye to this situation. They care about egg prices, but not about housing prices," analyzed the interviewee of the newspaper "Tsargrad."

It is worth noting that the high prices in the new housing market also drive up the prices of second-hand housing.

The Second Major Cause of High Housing Prices: The Trust Account System Introduced in 2019

The trust account system for housing introduced on July 1, 2019, is the second major factor driving up housing prices. Previously, officials had already become tired of protests from deceived homebuyers, but instead of strengthening regulation of the real estate market and eliminating fraud, they implemented new regulations. Now, buyers must deposit the full price of an unfinished house into a trust account and wait several years to get the keys to the house. In the past, buyers could get significant discounts when buying houses during the foundation stage; now, such large discounts are rare. Developers no longer rely on prepayment from buyers for financing, but turn to bank loans — which require paying high interest, and ultimately this cost is passed on to the buyers.

The Third Key Reason for the Surge in Housing Prices: Preferential Mortgage Policies

In mid-2020, to support the real estate industry, Russia introduced preferential mortgage policies, which lasted for four years. Low mortgage rates stimulated demand for housing and encouraged developers to expand construction. However, after the preferential mortgage policy ended, demand dropped sharply, but housing prices did not fall accordingly.

Additionally, developers need to "invest" millions or even tens of millions of rubles (including bribes) to obtain land for development, and these costs (including bribe expenses) are eventually included in housing prices — after all, these are considered part of the developers' "operational costs."

At the same time, high benchmark interest rates further exacerbate the unaffordability of housing. The current benchmark interest rate in Russia is 17% (annual), and according to data from the Central Bank of Russia, the current average mortgage interest rate is 21.6% (annual). A simple calculation shows: if you apply for a mortgage of 10 million rubles, repaying over 20 years, you will pay more than 32 million rubles in interest alone, and the total amount paid to the bank will exceed 42 million rubles! Obviously, under such repayment pressure, many people can't even consider taking a loan. Without a loan, you can't buy a house; without a house, population issues will become increasingly severe — how can you raise children without a place to live?

(Image caption: Without housing, population issues will become increasingly severe — how can you raise children without a place to live?)

Ordinary Families Struggle to Afford "Family Housing Loans"

However, there is still one "good option" — family housing loans, with an annual interest rate of only 6%, but the loan amount is very limited. For example, in Moscow and the Moscow region, the maximum loan amount is 12 million rubles, which is enough to buy a one-bedroom apartment in central Moscow, or a two-bedroom apartment within 15 kilometers of the Moscow Ring Road (MKAD).

"We considered applying for a family housing loan, but in the end, we found that we couldn't even meet the requirements for this loan," said Yulia, a resident of Tula, to the newspaper "Tsargrad."

Yulia has a husband and a daughter. Both of them have jobs, and their monthly family income is about 200,000 rubles, which is considered considerable in Tula. They currently live in a rented two-bedroom apartment, with a monthly rent of 40,000 rubles.

"We want to have three children, so we need a larger house, and it must be our own," Yulia said.

The housing security standard in Tula is the same as the national standard in Russia — 18 square meters per person. This means that a family with three children needs a 90-square-meter housing. But the problem comes with it.

"In newly built housing in Tula, the housing suitable for families with multiple children is either too small (only 60-65 square meters) or too large (over 100 square meters) and extremely expensive," Yulia told the newspaper "Tsargrad."

After a long search, Yulia and her husband found a "relatively small but expensive" housing — 101 square meters, totaling 20.7 million rubles. To buy this house, they face many difficulties: first, the down payment for the family housing loan is 20%, which is 4.14 million rubles. With their income level, even if they save 100,000 rubles a month (and the whole family lives on the remaining 60,000 rubles — knowing that the rent alone takes up 40,000 rubles), it would take 41 months (about 3.5 years) to save up for the down payment. Even if they manage to save the down payment by cutting back, the government's loan limit is only 6 million rubles. If repaid over 20 years, the monthly repayment would be nearly 43,000 rubles.

(Image caption: Loan repayment calculation screenshot.)

Additionally, the remaining 10.56 million rubles for the purchase of the house, they also need to apply for a "commercial loan," which would result in a monthly repayment of nearly 188,000 rubles.

(Image caption: Loan repayment calculation screenshot from the website "Banki.ru")

Combined, the two loans require a monthly repayment of 230,000 rubles. However, their family's monthly income is only 200,000 rubles, and they also have to pay 40,000 rubles in rent — no matter what, repaying the loan is an "impossible task" in reality, because the expenses far exceed the income.

Even worse, newly built housing is mostly "unfinished" — that is, it cannot be directly occupied, just a "space waiting for renovation." The average renovation cost for such housing is 60,000 to 100,000 rubles per square meter. At an average of 80,000 rubles per square meter, a 101-square-meter housing would require an additional 8.08 million rubles for renovation! In this case, the conclusion is obvious: families with multiple children can't afford to buy a house, even with the support of family housing loans, the funds are far from sufficient. What income level is needed to bear all of this? According to the most conservative estimate, if a family has three children, and the mother cannot work (after all, who has time to work when taking care of the children?), the only source of income (the father) must have a monthly salary of at least 350,000 rubles — this is already executive-level income, and this does not include renovation costs. If you add the 8.08 million rubles for renovation (this money needs to be invested within one or two years), even executives find it difficult to afford the cost of a "family home."

Status Quo and Prospects: The Housing Market Has Become a "Exclusive Domain for the Wealthy"

Under the "push" of officials, the housing market in Russia has become an "exclusive domain for the wealthy." Under the current system, the price of any housing is as high as several million rubles, making it impossible for the middle class to buy.

Konstantin Aprilev, vice president of the Russian Real Estate Agents Association, believes that to alleviate the housing issue, at least the financing method of real estate development needs to be changed. For example, homebuyers do not need to fully deposit into the trust account (thus avoiding the burden of high loans), but only need to pay 10% of the future housing price upfront, and the rest can be paid in installments later. At the same time, the Russian Federal Antimonopoly Service needs to thoroughly investigate the pricing mechanism of the real estate market, while the Central Bank of Russia needs to lower the benchmark interest rate to make mortgages more affordable.

The housing issue is closely related to population development, which in turn affects the future of the nation. Whether Russia can survive depends on whether this issue can be resolved. According to 2024 data, the average number of children born to each woman in Russia is only 1.4. To achieve natural population replacement (let alone population growth), this number must reach at least 2.15. Whether it's the maternity capital (matkapital, a subsidy system established by Russia to encourage childbirth) or family housing loans, none have solved the issue of housing affordability for young families. Clearly, Russia urgently needs new solutions.

Original article: https://www.toutiao.com/article/7561633054452711976/

Disclaimer: The article represents the views of the author. Please express your opinion by clicking the [like/dislike] buttons below.