What about the new construction market?
Federal real estate company “Etazhi” said that the average price per square meter of “primary” in Russia has increased by 1% since July and by 2.2% since January, to 121,285 rubles. The head of Cyan.Analytics, Alexei Popov, said that Russians mostly buy new apartments with 48 “squares” in August. So the most popular residence in a house under construction will now cost an average of 5.8 million rubles. In more than a million cities, the prices of apartments in the most preferred region vary. According to Cyan.Analytics, the average cost of an apartment in Moscow is 48 square meters. m, 41 square meters of St. Petersburg housing area 14.3 million rubles. m costs 8.9 million rubles. An apartment of 50 square meters in Novosibirsk. m can be purchased for 6.1 million rubles.
New building prices could rise another 5-7 percent in the fall due to inflation and rising construction costs. guessed the developer of the author’s residential cluster RDD Vladimir Shchekin.
However, there is another aspect; Preventing prices from making a sharper jump would be the limit of purchasing power.
Demand for new apartments will be high in autumn. Shchekin said that the cost of a loan from the owner for a new building and apartment will almost double, which will force some secondary home buyers to go to the market for apartments under construction. “Etazhy” Sales Director Sergey Zaitsev noted that the activity of buyers of apartments in new buildings has already increased: in the first half of August, the number of mortgage consultations increased by 40%.
The fact is that the terms of loan programs for home purchases in new buildings remained the same even after the Central Bank raised the interest rate by 350 basis points to 12% per annum on 15 August. socialbites.ca is among the top 50 Russian banks by assets. Most of them (VTB, Post Bank, Tinkoff Bank, Otkritie and Rosbank) did not change the conditions for buying housing in new buildings with concessional mortgages. However, while Absolut Bank decreased the rate by 0.2 percentage points, Rosbank increased it by 1.5 percent.
“Government programs dominate the primary market. The maximum interest rates charged to them are set by the government. Despite the decision of the Central Bank, the parameters of family, preferential and other programs did not change. Sovcombank chief analyst Natalia Vashchelyuk confirmed that the marginal rate for the family mortgage is 6 percent, and for the preferred mortgage it is 8 percent. He also admitted that the mortgage rates in the primary will not be adjusted in the fall.
What will happen in the secondary market?
According to “Etazhi”, the average cost per square meter in the secondary market in Russia in August amounted to 114,543 rubles; this is 0.7% more than in July and 3.9% more than in January. According to Popov, apartments with an area of 54 square meters were the most popular in August. Accordingly, an average of 6.2 million rubles will have to be paid for housing in the secondary market. The average cost per square meter of finished housing in Moscow is 303,232 rubles. Petersburg – 192,015 rubles, in Novosibirsk – 111,128 rubles.
“Prices in the secondary market have regained the decline since spring 2022 in June-August. True, the reasons for the appreciation of the old fund were of an emotional nature. In the secondary market, there was a surge in consumer activity before the key interest rate hike: buyers rushed to buy mortgages on the old terms. And the owners took advantage of the excitement,” said Ruslan Syrtsov, Managing Director of Metrium.
According to the expert, now ready-made apartments will become noticeably cheaper. However, the demand for them will not increase due to high mortgage rates.
According to “Etazhi”, in August, Russians began to consult on a mortgage for a “secondary” apartment 15% more often – but still this figure is 2.6 times less than for new buildings. After the Central Bank’s decision, housing loan interest rates increased by an average of two points. In mortgage programs for the purchase of ready-made housing, Rosbank increased the rate by 1.5 percentage points, while VTB, Otkritie and Absolut Bank increased the rate by 2 percentage points. Post Bank and Tinkoff Bank did not disclose the increase threshold. Vashchelyuk said that the maximum loan rate for the purchase of finished apartments is now about 14% per year.
“Purchasing activity will inevitably collapse. Syrtsov stressed that new market mortgage rates are becoming prohibitive for most clients.
He said many property owners will temporarily delay the sale of apartments. Those who need to act urgently (for example, due to relocation) will have to offer a large discount. And borrowers will start looking for cheaper housing options; a smaller flat away from the centre, with worse repairs. Buyers who have the opportunity to wait for the keys from the developer are redirected to the housing under construction. Syrtsov summarized that in any case, sales in the secondary market will slow down.
Vashchelyuk admitted that after some time on the secondary market it may be possible to find profitable options for resale or rental.
BCS World of Investments stockbroker Valery Yemelyanov is confident that buying an apartment to speculate on prices is a bad idea. Price dynamics are unimportant when real estate is needed for a lifetime. But rents in Russia are consistently cheaper than mortgages, and that gap will only get bigger, he said.
“From a financial standpoint, rental housing will be much cheaper and it will be easier to replace it. Buying now on credit will most likely result in losses: you will not even sell an apartment for the price you bought it. Or if the apartment is not bought from the contractor, you pay too much in interest on the secondary housing, ”the expert concluded.
According to him, if you are ready to take a mortgage, you should carefully choose the region, city, district and residential complex for living. It is a good idea to avoid excessively illiquid objects and inflated houses.