Page 50 - bne IntelliNews Russia OUTLOOK 2025

In the meantime, rental prices are already soaring to take account of the new realities and have created a "perfect storm" for housing affordability. The abolition of non-targeted preferential mortgage schemes and the increase in loan rates have pushed housing beyond the reach of many, while rental costs have surged across the country. The one exception where subsidies are still available is with the “family mortgage” for families with more than three children as part of the Kremlin’s ongoing efforts to counter Russia’s demographic problems.
Initially intended as a temporary measure, the scheme played a crucial role in the market, accounting for more than a quarter of all mortgage loans in 2023. By the first quarter of 2023, preferential mortgage schemes accounted for 70% of mortgage loans, and a staggering 96% of loans for new builds, reports The Bell. Over four years, the state spent approximately RUB600bn ($6.2bn) subsidising these loans.
5.4 Retail
There is a lot of uncertainty over the fate of organised retail in 2025 as the cost of borrowing crisis gathers pace. According to one report, 25% of Russian malls may face bankruptcy in 2025. Russian shopping centres have been hit hard by the departure of major foreign companies, rising operational costs and greater competition from online marketplaces.
Part of the problem is that many of the businesses of the formerly international brands have been taken over by Russian entrepreneurs, who borrowed heavily to pay for the acquisition and set-up costs. Now that interest rates have soared, these loans are becoming prohibitively expensive to service.
In addition, consumption is expected to slump in the first half of 2025 as the government and CBR attempt to cool the economy using non-monetary policy methods.
The strong performance of the Russian economy over the past two years has defied predictions, especially with respect to government spending and private consumption. Current deficits are so far at sustainable levels, and consumers, especially in 2024, have been able both to save and increase spending.
The initial burst of private consumer demand has been the key factor driving economic growth in 2024, thanks to a consumer boom fuelled by the Kremlin’s spending on military wages.
50 Russia OUTLOOK 2025 www.intellinews.com