In 2025, the rental property market will present a contradictory situation. Will the supply of housing increase and how will prices change?
In 2025, there will be an increase in supply in the rental market for apartments. This trend is a result of the changing conditions for mortgages and current real estate market trends, leading to the peak in popularity of long-term rentals in 2024.
Renting a property has become a popular alternative for many people to solve their housing needs. People are delaying purchasing their own property until mortgage conditions change or until they have saved up for a larger down payment. In such situations, people either extend their current lease or start looking for a rental apartment.
This trend in the rental housing segment has led to increased demand in 2024 not only during the traditionally active months of August and September but also in the usually quieter months of October and November, according to Roman Zhukov, the head of the "Yandex Rent" service.
According to Zhukov, the transition from the purchasing segment to the rental segment in 2025 may not be as dynamic and peak as it was in 2024, but the trend will continue. This trend will persist until the key rate of the Central Bank changes, along with market mortgage rates. As long as monthly mortgage payments exceed the rates for long-term rentals, renting an apartment will remain a more profitable strategy for those planning to resolve their housing needs in 2025. The rental market will remain a landlord's market.
Starting from January 1, the prices for secondary real estate will start to decline. The long-term rental option will be beneficial for those whose properties become limited in 2025 and increase in value. These properties include small studios in Moscow and the region, which are also the most profitable for renting, according to Maxim Lazovsky, the founder of the "Lazovsky Investments" project.
Renting will continue to grow in popularity. Buying an apartment is difficult due to higher mortgage requirements, high interest rates, and the depletion of preferential limits. It is also difficult to buy suburban real estate for the same "mortgage" reasons. The expectation is that limits will be introduced, as there is a significant amount of money in accounts. Rent prices will not decrease significantly. Renting suburban real estate will experience a decline after the holidays and will pick up during the spring, with an indexation ranging from 5% to 15%, depending on location and property class.
Another trend in the market that will continue in 2025 is the flow of unsold secondary apartments into the long-term rental segment. In 2024, there was an increase in the average time an advertisement for selling secondary real estate remained on the market in almost all major cities in Russia, according to "Yandex Rent" data. Sellers are reducing prices in their listings. On average, sellers in major cities reduce prices by 3-5% depending on the region. In Moscow, the average price reduction was 3.8%. Larger discounts can be negotiated during apartment viewings and deal discussions, with discounts reaching up to 10%. According to Roman Zhukov, significant discounts are offered by sellers who are in a hurry to sell their property. Those who are not willing to negotiate and can postpone the sale of their property switch to the rental segment to ensure stable passive income.
In 2025, investment properties will continue to transition into the rental market. These are properties purchased at lower rates during the mortgage boom. As new residential buildings are completed and prepared for occupancy (renovations, furnishing with furniture and appliances, interior design, etc.), the long-term rental market will be replenished with new offers. These newer properties will be more expensive compared to the old housing stock or other newly built properties from the previous year.
Another trend that will continue in 2025 is the entry of Generation Z renters into the market. The demand from this generation is becoming increasingly noticeable as they grow older, establish stable incomes, move out of their parents' homes, and rent their first apartments. In 2025, the share of these renters will continue to grow, and their demands and requirements for rental housing will become more significant. According to "Yandex Rent" research, 35% of Generation Z representatives already rent real estate, with every fifth person considering renting an apartment. Around 17% currently do not rent but have rental experience, and about 7% are actively searching for a suitable apartment.
Many landlords will adapt their rental properties to cater to the preferences of this new generation of tenants in order to rent out their properties more quickly and profitably. For Generation Z renters, aesthetics are particularly important when it comes to rental housing, including stylish renovations, interior design, and decor (62% of respondents). Another important factor is the ability to move in without any hassle, which includes the presence of basic furniture and appliances, an important criterion for 52% of Generation Z renters. Additionally, 47% of renters mentioned that they would prefer not only basic appliances but also additional appliances and gadgets, such as air conditioning, dishwashers, and clothes dryers, to be already installed in the apartment when they move in.
According to Elena Kuprianova, the sales director of the B2B interior company Mr.Doors, the majority of landlords now prefer partially or fully furnished properties for rent. More than 70% of property owners choose to rent out their properties with furniture, while more than 20% still only provide a finished space. Partial or complete furnishing makes properties more appealing on the market. Additionally, there is an increase in the average cost of furniture, not due to higher prices but due to the choice of higher quality materials. This can be seen as an investment in rental properties.
It is highly unlikely that rental prices will significantly decrease in 2025. There may be a slight monthly decrease in prices due to seasonal cycles, but it will be insignificant, within the range of a few hundred rubles, and will compensate for the traditional periods of increased tenant activity. At the same time, in annual terms, the cost of renting will continue to show growth. This is the forecast made by Roman Zhukov. The growth will be more moderate, not only due to increased demand for rental apartments but also due to the introduction of new, more expensive investment properties into the market.
