That’s right: An average home loan in Russia (in 2012 dollars) wouldn’t cover the cost of a good couch, let alone a house, in the U.S.
Not only does that number seem low by U.S. standards, it’s also below the averages for each country in the European Union. Residential debt accounts for 2.6% of Russia’s gross domestic product (GDP), according to the study. The Czech Republic, which has the lowest average mortgage debt in the EU, posts mortgage debt as 13% of GDP.
On the high end, mortgage debt is more than 100% of GDP in Denmark and the Netherlands.
The Housing-Wealth Relationship
An average mortgage of $400 — how can that be?
For starters, countries with higher income tended to have higher mortgage debt, with Denmark reporting the highest debt per capita and highest average salary. While the debt and salary numbers correlated in many countries, it’s not an absolute relationship. For instance, the Netherlands’ average mortgage debt was four times the average in Austria, though the countries’ average salaries were within $600 of each other.
Russia’s average income is lower than any EU nation. In contrast, it has the least affordable housing of those countries.
The study identified an average new home as about 754 square feet — which is smaller than the average U.S. apartment. It would take a little more than 10 annual salaries to buy a home in Russia. In Denmark, it would only take a bit more than two annual salaries.
A final Russia statistic that popped out: Its capital, Moscow, was one of only two cities in the study where the average home price was more than three times the national average. (Moscow and Munich home prices are 355% of the averages in Russia and Germany.)
A $400 mortgage sounds tempting, but that doesn’t make Russia a cheap place to live.