Experts explained why the drop in demand almost does not lead to a decrease in the cost per square meter
In March of this year, the volume of mortgage issuance decreased by almost 40%. This was reported by the United Credit Bureau (UCB), and a similar trend was confirmed in other similar companies. The main reasons for the decline were the worsening conditions for issuing preferential housing loans against the backdrop of the high key rate set by the Central Bank of the Russian Federation, as well as tightening requirements for preferential mortgages. MK found out from experts what will happen in the housing market and whether citizens can benefit from the cooling of the mortgage market.
In March, Russians issued 126 thousand mortgage loans worth 500 billion rubles from banks, which is 39% and 36%, respectively, less than in the same month last year, OKB reported. Other companies in this market have also seen a decline. Thus, the Scoring Bureau indicated that in March of this year there were 34% fewer housing loans in the number of contracts and 27% in money than in the first month of spring 2023. The National Bureau of Credit History (NBKI) noted that over the same period, the reduction in the issuance of new mortgages compared to 2023 amounted to 24% in units and 22% in rubles.
The authorities are deliberately “freezing” the real estate market. “For the economy, it is now important to reduce the share of the debt burden and stabilize the housing market,” explains assistant professor of the Department of Finance for Sustainable Development of the Russian Economic University. G.V. Plekhanova Maria Ermilova. The “powers that be” have been consistently taking steps towards this for more than six months. As the head of the Analytical Center “Real Estate Market Indicators” Oleg Repchenko recalled, rates on market loans became prohibitive after the key increase, the conditions for issuing preferential mortgages also worsened: the down payment at the end of last year was increased to 30%, the maximum credit limit for the capital regions was reduced from 12 million to 6 million rubles. Let us recall that Moscow, St. Petersburg and the regions adjacent to megacities accounted for up to a third of the volume of the concessional lending market.
In addition, the regulator introduced protective surcharges to risk ratios for mortgage loans with a low down payment and for heavily indebted borrowers. And the main goal of these measures was to cool the market and stop rising prices. Let us also recall that in March 2023 the key rate was at 7.5% — this allowed many Russians who did not fit the parameters of preferential programs to buy housing with a mortgage on market conditions at rates of 8-9.5%. In March 2024, market mortgages are actually twice as expensive: they are issued at 16.5%-18%.
According to the laws of the market, a decrease in citizens' interest in mortgage lending should lead to a decrease in demand for real estate and, consequently, cause a drop in the cost of apartments. However, experts have differing opinions on whether this mechanism will work this time. “You shouldn’t expect a reduction in the cost per square meter, since, unfortunately, there are no prerequisites for this — this is project financing from banks, it directly affects the cost per square meter, as well as the high cost of building materials,” says the head of the mortgage lending department of Est-a-Tet Maria Avrova. “At best, one-time promotions or additional discounts from developers for a certain pool of apartments are possible.” In her opinion, Russians do not feel any benefits from the “freezing market” of lending, because the cost of housing is constantly growing, loans are becoming less accessible and expensive, but down payment requirements have increased.
But there is another opinion. According to Repchenko, a decrease in the cost of housing against the backdrop of sagging demand is expected in the secondary market of the Moscow region: throughout the first quarter, the average cost of a meter on the secondary market there was marking time, and in April for the first time since December 2022 it showed a minus, albeit symbolic (-0 .2%, up to 271,690 rubles per sq. meter on average). “Most likely, in the coming months the downward trend in prices will continue; there is no reason for the trend to reverse,” says Repchenko.
There is no need to talk about a downward trend in prices on the new building market yet: it all depends on the decision on the future of non-addressed preferential mortgages after July 1 and on the form in which family mortgages, which today also support well, will remain demand. “If the share of state programs does not decrease significantly, then the primary market will face stagnation, that is, prices will mark time,” the expert believes. “But perhaps the size of the discount and the number of discount offers will increase to maintain sales during the seasonal drop in demand.” Today, the maximum discount on the primary market reaches 30%. And buyers, of course, will benefit from the cooling of the real estate market: lower prices will make housing more affordable, Repchenko is sure.