Analyst Repchenko: “Sellers still can’t get used to the fact that demand has gone”
The share of overvalued housing in the secondary market of the Moscow region by the end of 2023 reached almost a third — 30%. Specialists of the real estate brokerage agency DOLGOV PRO came to this conclusion after studying demand and transactions in November.
There are two main reasons why owners significantly inflate the price. The first is expensive renovations and the presence of furniture in apartments for sale. “Owners excessively overestimate a home if they have renovated it in the last four years and also equipped it with a built-in kitchen, wardrobes, sofa chairs, and beautiful lamps,” say the authors of the study. “Out of the total number of overvalued apartments, 78% are like this.”
Of course, moving into an apartment that has already been furnished to the highest class is much better than doing the renovations yourself and ordering cabinets. Again, you won’t have to disturb your neighbors with the noise of the drill and other loud sounds; no need to invite craftsmen to take measurements and look for furniture. But the cost of services from sellers exceeds the amount they spent by one and a half to two times. They invested a million and added one and a half to two million to the cost of the offer.
“I bought a turnkey apartment in the capital’s Kuzminki for 14 million rubles in November,” says Muscovite Irina. – At first, I seemed to like everything: freshly renovated, nice furniture, clean, cozy. But until you live, you won’t understand. And soon the shortcomings began to appear. It turned out that the electrical wiring was “lame” in places, and the cabinet doors were flying off their hinges.
The apartment sellers added a couple of million rubles to the average market price in the area. “I was ready to overpay just to move in and live right away, I consciously went for it,” continues Irina. “But now I understand that the furniture will have to be changed.”
The second reason for the inflated price of housing being sold is the possibility of obtaining a new apartment under the renovation program. Sellers are appealing to the fact that in the next three to five years the buyer will receive a new apartment with an improved layout.
— The prospect of getting an apartment in a new building, having bought housing in an old housing stock and waiting a little, attracts people, analysts say . – But sellers are blatantly speculating, adding two to three million rubles to the cost of housing, depending on the square footage.
Tatyana says that she spent quite a long time looking for housing near the park. She and her husband have two small children, and one of the conditions for the purchase was the location of the house in a green area. Finally, the realtor offered the couple a two-bedroom apartment in Sviblovo, a couple of hundred meters from Yauza Park. However, when she saw the offer price, the woman was embarrassed, to put it mildly.
— The area of the apartment on the fifth floor of a five-story panel building, which is due to be demolished by 2030, is 46 square meters. The owner was ready to leave the furniture, including the built-in mirrored cabinets. Not exactly out of the kindness of my heart. It’s just that, as we found out later, it was more convenient for him. He has been living abroad for a long time, and he is unable to remove something from his apartment or look for buyers for a sofa and bedside tables remotely. And he, don’t be a fool, decided to play on two factors that increase the price at once: furniture and speedy demolition, asking 13 million rubles for the apartment.
At the same time, two-room housing of a much larger area (64-70 square meters) in modern houses in the neighborhood, with a large loggia, air conditioning, elevators, and a garbage chute, cost 16-18 million rubles, Tatyana continues. In the end, his wife chose him and also asked for a discount of half a million.
It is completely normal to demand a discount from sellers of housing in the old stock. The head of the analytical center «Real Estate Market Indicators» Oleg Repchenko predicts that the cost of apartments on the secondary market during the year may fall by 10% or even more. Demand is falling, mortgages are becoming more expensive. But a significant change in prices will not happen immediately.
“We are unlikely to see a serious reduction in prices at the beginning of the year, because sellers need time to get used to the fact that demand has really gone away,” comments Oleg Repchenko. — On the market of new buildings, prices will also go down, but the decrease will most likely be camouflaged by discounts and other promotional offers like “free parking space.” Prices are more affordable on the secondary market. Here, a meter of housing as of November costs an average of 269,050 rubles, that is, a 40-meter secondary apartment will cost approximately 10.7 million, a 46-meter one — 12.4 million. Of course, the cost depends on the age of the house and the condition of the apartment itself.