The housing market in Russian cities in 2018

The preliminary results of the Russian economy’s development in 2018 appear to be rather controversial. On the one hand, the growth rate of GDP gained 2.3 percent; on the other, the consumer inflation index increased significantly, to 4.3 percent, from its record low of the entire period since the onset of market reforms (2.5 percent), achieved in 2017. The movement pattern of personal disposable income, which is a much more significant factor determining the situation in the real estate market, was quite volatile throughout the course of last year, with multiple trend reversals. In spite of the positive results of the first two quarters, probably achieved thanks to the current electoral cycle, in the end the personal disposable income index stayed roughly at the same level as in 2017. The RF Central Bank twice reduced its key rate over the course of H1 2018, to 7.25 percent per annum in early autumn. However, over the next few months it was once again hiked twice, and so returned to its level of late 2017 (7.75 percent). The tricky movement pattern of the key rate pushed down the interest rates on bank loans and notably improved the position of borrowers.