Prices for long-term rental housing in St. Petersburg increased by 25% over the year
This was caused by a 70% increase in demand and a reduction in supply
Rental housing in St. Petersburg continued to grow at the end of 2023. The average rental rate for a one-room apartment has reached 35,100 rubles per month, while the cost of a two-room apartment has increased to 55,500 rubles per month. Both market segments showed a 25% price increase over the year. At the same time, prices stagnated from January to May, and an increase was observed from June to October.
The price growth is associated with increased demand in the second half of 2023. The demand for long-term apartment rentals in St. Petersburg increased by 70% over the 12 months of last year compared to the same period in 2022. These statistics include the number of ad views and calls.
"Renter activity in 2023 began to increase earlier than usual – not from mid–July, but from the first decade of June and remained at a high level for longer than usual - until November. Nevertheless, demand traditionally peaked in the second half of August", the expert Elena Lapshina commented at "Cian.Analitika".
Market participants interviewed by the publication also confirm the increase in rental demand.
By estimation of Vice president of the Association of Realtors of St. Petersburg and the Leningrad Region Yuri Zagorovsky, the number of transactions in the long-term rental market increased by 30-40% over the year. At the same time, the amount of offers decreased significantly last year compared to 2022. according to "Cian.Analitika" , at the end of 2023, about 3,700 apartments were available on the long-term rental market in St. Petersburg, and their number tripled over the year.
Comeback of renters
Experts note that a combination of different factors influenced on the activity of renters in 2023. PIA "Nedvizhimost" CEO Maxim Yeltsov emphasizes that the dynamics of demand last year was largely due to the low indicators of 2022.
"After the beginning of special military operation in 2022, as well as the announcement of partial mobilization, there was an outflow of citizens abroad. in 2022, some foreign experts left the market – top managers of foreign companies who worked in Russia and also rented apartments for a long time. Thus, there was a surge in supply, and citizens were in no hurry to rent housing", - Maxim Yeltsov commented - "However, this year some of the relocate citizens began to return, which affected the increase in demand".
Mister Yeltsov believes that the increase in renter activity in 2023 is partly due to the influx of workers to St. Petersburg from other Russian regions against the background of an increase in industrial production. According to Federal Service of State Statistics the index of industrial production in St. Petersburg compared to the corresponding period in 2022 amounted to 109.6%, for manufacturing – 111.3%.
Waiting game
Mrs. Lapshina notes that the increased activity of tenants in 2023 is also due to the tightening of mortgage lending conditions in the second half of the year. This prompted some potential buyers to become renters rather than owners, the expert says. At the end of July, the Central Bank raised the key rate to 8.5%, and in August again – to 12%. In September, a further increase followed – up to 13%, and in October – up to 15% more. In December, the rate increased to 16%.
The tightening of credit conditions has mostly affected the secondary market, where there are no state-supported programs, the rates for which are fixed by the government. The rates for market mortgage programs in November 2023, following the increase in the key rate, were already more than 16%.
"As loans have become significantly more expensive, some potential borrowers have reduced their activity in anticipation of a possible reduction in mortgage rates in the future" – Zagorsky commented. Accordingly, this factor influenced the increase in rental demand in the second half of 2023.
We remind that the number of mortgage loans in 2023 has been gradually growing since the beginning of the year and reached its peak in September. At that time, St. Petersburg citizens, according to the Central Bank, issued 8,928 mortgage loans. In November, the number of mortgage loans decreased by 11%. Despite the decline, the indicators remained high relative to the first half of 2023. However, the tightening of the regulator's measures still led to a cooling of the market.
Experts believe that, taking into account all factors, one should not expect a decrease in rental prices in the coming months. At the same time, Yeltsov notes that by the peak of the season, the cost of renting an apartment is likely to increase.
Author: Daria Varaksina
Source: «Vedomosti Severo-Zapad» newspaper
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