Abstract

The thesis is aimed to analyze Russian housing markets by investigating the relationship between housing prices, mortgage rates and housing affordability. The steady increase of household income and outpacing housing prices have created a mismatch in these factors in the past few years. Although mortgage lending in Russia has gained momentum since 2005, there currently is only 60% of homeownership. Estimating price-to-income ratio and housing affordability index, we find that households have less than the necessary amount of money to afford housing. In general, Russian households have to save over 3 years and for Moscow residents a period is around 6 years, on conditions that all their net income were set aside for housing purchase. Our results show that the difference in housing affordability among the regions is significant, especially in the case of Moscow City. The multiple regression results show that housing affordability is significantly positively correlated with household income and insignificantly with housing prices, but negatively with mortgage rates. The national priority project “Affordable and comfortable housing to the Russian citizens” and its subprograms is a significant support for certain categories of population to improve their housing conditions and a quality of life.

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