Housing costs: low by international standards, but discontent over skyrocketing prices
For several weeks now, citizens in Russia have been increasingly complaining about skyrocketing utility bills. For example, in a video posted on social media, a young woman says that her utility bill for January came to 30,000 rubles, equivalent to 332 euros. Previously, she paid 11,000 rubles—122 euros—for her three-room apartment. There have also been numerous complaints about sharply rising heating costs for one-room apartments. In several cases, the bill came to 4,000 rubles (44 euros). Previously, heating costs during the winter season ranged from 1,500 to 3,000 rubles, or 16 to 28 euros.
Last week, the Russian Federal Antimonopoly Service (FAS) announced that, apart from the planned VAT adjustment, no further changes had been made to utility rates. The agency explained that the high bills could be due to higher energy consumption during the winter season.
Price Hike as Planned
At the beginning of this year, utility rates across Russia were raised by 1.7%. The first increase is linked to this year’s VAT hike from 20% to 22%. Citizens will really feel the impact of the rate change in the fall. Starting October 1, rates will be raised for the second time, with the increase varying by region. In Moscow, utility costs will rise by 15%, and in St. Petersburg by 14.6%. The lowest rate increase, at 8%, will be in the Siberian Republic of Khakassia, while the highest will be in the North Caucasus region of Stavropol (22%). In previous years, rates were typically adjusted on July 1.
The government justifies the second regional rate increase by citing inflation adjustments and the need to renovate dilapidated infrastructure networks. The funds are to be allocated toward the modernization of equipment and pipelines. The rate increases are part of a strategy to renew the housing and utilities sector, which calls for investments totaling 4.5 trillion rubles by 2030, equivalent to 50 billion euros.
Rates have been rising for years
Last year alone, utility costs rose by an average of about 12% compared to 2024, according to calculations by the online magazine T-J, published by the financial institution T-Bank. In 2024, the increase was around 10%, and in 2023, 8%. Last summer, nationwide gas and electricity costs rose by an average of 10.3% and 12.6%, respectively. Gas prices were driven by a 10% increase in the tax on the extraction of energy resources. Energy suppliers passed this surcharge on to their customers.
Yet Russian gas and electricity prices are among the lowest in the world. As of summer 2025, natural gas prices for Russian households stood at $0.009 per kilowatt-hour, according to figures from the data provider Global Petrol Prices. By comparison, the gas price in Germany is $0.13 per kWh, which is fourteen times higher than in Russia. In the U.S., the price is $0.04, and in China, it is $0.05. Russian households pay just under $0.07 per kilowatt-hour for electricity. In Germany, the electricity price is $0.38 per kWh—five times higher than in Russia—in China it is $0.50 per kWh, and in the U.S. it is $0.19 per kWh.
Maximum Index to Ease Existential Fears
Housing issues are sensitive and, for a segment of the population, linked to existential fears. To prevent drastic increases in utility costs, each Russian region sets its own annual maximum index, which must not be exceeded when raising fees for housing and municipal services. To put this in perspective: If the regional index this year is 15%, as it is in Moscow, and utility costs were previously 7,000 rubles (77 euros), then starting this fall, 8,050 rubles (89 euros) will be due. An average family of three paid around 6,850 rubles in utility costs in Russia last year, approximately 76 euros. These figures are based on Rosstat data from 2023, including rate increases from previous years.
In Russia, utility costs consist of hot and cold water charges, heating costs, electricity and gas consumption, as well as drainage fees for the use of the public sewer system; in many cases, building maintenance and garbage collection are also included. Heating costs account for 30% of total utility costs, and building maintenance accounts for 20%. Another 20% is attributable to water and drainage costs, electricity (12%), gas, waste disposal, and building renovation (18% combined).
The Housing Sector: A Major Construction Site
Mark Geller, managing director of the Association of Russian Property Management Companies, is well aware of the weaknesses in the Russian housing sector. He points to two major issues: the deterioration of infrastructure and the existing tariff system. Geller describes the poor state of infrastructure as a “ticking time bomb.” “In a number of regions, 60–80% of the infrastructure networks are worn out, leading to frequent breakdowns,” says the association head. He goes on to explain: “The heating networks, water pipes, and elevators are a legacy of the Soviet 1970s and 1980s. According to preliminary estimates, Russia needs at least 4.5 trillion rubles (50 billion euros) for modernization; in reality, the figure is even higher.”
Today’s consumers don’t understand what they’re paying for, while building managers and energy suppliers, in turn, can’t understand why the rate doesn’t even cover costs, according to Geller. This leads to mistrust, conflicts, and corruption risks. The managing director cites flaws in the billing system as another factor: “As long as you, as a consumer, don’t see how many cubic meters of water or kilowatts of electricity you’re using, there’s no point in saving.”
According to Geller, tenants actually pay only 30–50% of the actual service price. He does not see a solution solely in market-based rates. “The double rate increase alone does not address the problem. We need transparent rates with accurate tracking of energy consumption,” Geller demands. He is equally critical of modern consumer culture in Russia. The motto “My apartment is mine, I don’t care about the hallway” is a thing of the past and a remnant of free privatization. “The state distributed home ownership to people but didn’t explain to them how to take responsibility,” explains the association head.
This article first appeared in the exclusive newsletter of the German-Russian Chamber of Foreign Trade
