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. Last Updated: 07/27/2016

City Housing Prices Grow 7.5% a Month

Moscow's residential real estate market continued to soar in March, as price increases hit an all-time high.

The Irn.ru analytical center reported that apartment prices in the capital rose on average by 7.5 percent last month -- the greatest monthly price jump in the market's 15-year history. The previous record was 5 percent.

The average Moscow apartment price reached $2,620 per square meter, Irn.ru said in a report on its Internet site.

It added that the fast growth in prices was an "obvious anomaly" in the current conditions of an established market in stable political and economic conditions.

Housing costs increased most where demand was greatest -- for relatively inexpensive one-room apartments in panel blocks located in the city's so-called "sleeping regions" in the outer suburbs.

Typical apartments of 60 square meters already cost $160,000 on average, and asking prices may hit $200,000 if current trends continue, the Irn.ru report said. Newly constructed apartments of about 100 square meters within the Moscow Ring Road already cost more than $300,000, according to the report, while new high-end apartments within the Third Ring Road average 154 square meters and sell for more than $1 million.

The Irn.ru report said such prices appeared "astronomical" when measured against middle-class wages.

Industry experts forecast that the psychological barrier of $3,000 per square meter may soon be exceeded, according to an Interfax report.

"We need to think of how to make housing prices reasonable," the news agency quoted State Duma First Deputy Speaker Oleg Morozov as saying. He attributed 50 percent of current price levels to profiteering by speculators, and called for ways to block such practices, as well as for increased competition in land purchases.

Overall, Moscow apartment prices have risen 50 percent since March 2005. This year could witness a 100 percent price increase if the current rate of growth continues and other economic and political factors remain unchanged, the Irn.ru report said.

Interfax quoted the vice president of the Russian Realtors' Guild, Konstantin Aprelev, as saying that the recent surge was a result of increased mortgage lending, purchases by workers who recently received salary bonuses, and a rush among people saving for an apartment who decided to buy before prices exceeded their means.

Both Irn.ru analysts and market professionals interviewed by Interfax also cited a drop in new construction amid heightened demand as driving price hikes. Current apartment offers represent only one-fifth of what was available in March of last year, according to Best real estate agency.

Interfax reported that industry experts expected the market to stabilize, however. A decline in business activity during the May holidays will provide a temporary price freeze, said Alexander Slety, a real estate analyst at Agent 002, Interfax reported. Slety said the freeze might, in turn, bring about a psychological calming of the market.

"With the unnatural rates of price growth we are seeing now, stagnation in the market is inevitable," said Vladislav Lutskov of Miel, Interfax reported.