Increasing the key rate will not allow either demand or the cost per square meter to grow
At the end of September 2023, the sales record for new buildings in the Moscow region and in cities with a population of one million was broken. “A year and a half ago, no one expected that in such difficult economic conditions unprecedented records could be set in Russia,” says analyst Alexey Popov. “There are no records in St. Petersburg, but still, sales were high.”
At a specialized real estate conference, experts summed up the results of the housing market for 2023 and made forecasts for 2024.
The rush demand at the turn of summer and autumn was associated with jumps in the ruble exchange rate and uncertainty regarding the key rate, Popov believes. Having no alternative, people once again decided to save their savings by investing them in square meters. It is curious that Russia is one of the few countries whose residents consider buying real estate an investment. Empty apartments, for which you regularly need to pay utility bills, are by no means a profitable acquisition. However, as already mentioned, unfortunately, there are no other options to save family money.
There was no record increase in housing prices in 2023, as, say, in 2020-2021 — simply because there is no room for prices to rise. The only short period of time when developers decided to return to indexing the cost per square meter was from August to October.
The share of mortgage transactions increased sharply: in St. Petersburg it exceeded 80%, in Moscow and the region — almost 80%. The Central Bank made all possible efforts to pay off this wave, including achieving the abolition of near-zero mortgages, prohibiting down payments below 20% and tightening requirements for borrowers.
In the secondary market, lending has never played a key role due to the lack of preferential programs and high (actually prohibitive) market rates. This year is no exception — mortgage transactions for apartments in the old stock amounted to about 40%.
“We predict that the key rate of the Central Bank in 2024 will remain at the level of 14-15%,” says Tsian CEO Dmitry Grigoriev. – And it is clear that such a high rate will primarily affect demand, and significantly. It may drop to the level of early 2023 — this is about 40% lower than in the peak August and September of this year.
Grigoriev reminds that the preferential mortgage program ends in July 2024. It is not known for sure how housing lending conditions will change. It is only clear that it is not in the direction of reducing the mortgage rate. However, the expert believes that there will not be a big drop in prices on the primary market, since the construction of real estate is tied to bank financing and there is no flexibility in reducing prices. Developers will begin to provide discounts only for individual residential complexes.
Prices on the secondary market due to decreased demand will fall by 10-12% in 2024, continues Grigoriev. Theoretically, they could have fallen even more, but in practice it’s unlikely: “The primary and secondary markets are closely related. And if in one (primary) prices do not go down, then in the second there are no big prerequisites for this.” But, of course, buyers will be able to get a good discount from owners who want to sell apartments quickly.