The property market in Russia underwent a huge boom between 2000 and 2007, and prices increased by around 436%, but property prices began to weaken towards the end of 2008 and to decline during the second quarter of 2009. House prices are still declining, even though the rate is slowing.
Although prices of resale apartments increased by 3.79% to the year ending the second quarter of 2011, when adjusted for inflation prices actually declined by 5.25%. In Moscow resale apartment prices fell by 5.38% after being adjusted for inflation, but in St Petersburg prices fell by a massive 15.23% after being adjusted for inflation.
Part of the problem is that the ruble has depreciated significantly against the US dollar, and was down from RUB23.36 in July 2008 to RUB35.82 in February 2009. This massive fall meant those who had already committed to buy or rent property had to raise around 50% more cash, putting pressure on the housing market which contributed to its crash in 2009.
By July 2010 the exchange rate had recovered somewhat and stood at around RUB30.76 to 1 US dollar, and according to the IMF the ruble is undervalued by up to 21% against the dollar and by 15% against the euro, and is expected to recover over the next few months to a year.
Private ownership of property has been allowed by citizens and foreigners since 2001 and since 2006 in Moscow, but Moscow has the dubious distinction of being amongst the world's most expensive cities for expatriates to live in.
No comments:
Post a Comment