«The 55% difference in housing prices on the primary and secondary markets speaks for itself»
Russia has been living without preferential mortgages for almost a month now. Apartment sales have fallen two-thirds, housing prices have finally stopped growing, and «new» residential complexes still have gaping black windows. In the first half of 2024, due to the rush demand, developers accumulated fat, but in the future they will no longer be able to make a profit in the usual, very good amount.
Experts discussed the dim prospects for the housing market at a round table at RIA Novosti.
Deputy Minister of Construction and Housing and Communal Services Nikita Stasishin began with a wonderful:
— In 2024, it is predicted that 100 million square meters of housing will be commissioned in Russia. On average, 65-75% of completed housing has been sold across the country. The family mortgage, which will be valid until the end of 2030, is aimed at the most important thing in our country’s economy — increasing the birth rate. It was not easy for us to agree on the parameters for extending the family mortgage. We spent more than three months on this with our colleagues in the government.
If after the transition to escrow accounts the main competitive advantage of developers was the quality of projects, then in the next year and a half it will be the delivery of apartments and the transfer of keys on time, the Deputy Minister suggested. And he strongly recommended “not to misbehave with shifting the deadlines for the transfer of apartments to citizens to the right.”
Then Nikita Stasishin cited a truly fantastic figure: according to him, the housing affordability ratio in 2023 was 3.4 years. Simply put, this is exactly how long it takes to save money to buy an apartment for the average Russian family of two working people (without taking into account the minimum costs for food, clothing, transport, treatment, etc.).
Let's do the math: in order to save up for a two-room apartment in Moscow worth 17-18 million rubles in 3.4 years, a family must receive at least five million a year, that is, almost 450 thousand rubles a month.
Prices in the provinces apartments are lower (as are salaries). Let's take 8 million for new housing as an example. We get that the family’s earnings should be 2.3 million per year, or 200 thousand rubles per month.
Of course, there are city dwellers who earn more, but they are definitely not among the statistical average…
The Deputy Minister ended his speech with an even more positive statement: “The active phase of price growth is over. Prices for new buildings over the previous quarter increased by only 0.6%. In the future, the growth rate of housing costs will not exceed 4-5% per year.»
The head of the analytical center, Mikhail Goldberg, said that the number of housing transactions in 2024 will decrease by a total of 30%, and in the second half of the year — by 50%.
— During its operation, 1.6 million families took out preferential mortgages. The construction industry received eight trillion rubles. But a mortgage is good when we do not wait for the next preferential programs, but count on affordable rates. However, such extreme rates on market mortgages (above 20% per annum) have not been seen for a long time, he says.
There are loans being issued, but in very small quantities, the drop was 60%, the analyst continues. People decide to take housing at a market rate if they already have, for example, a one-room apartment, which they want to exchange for a slightly larger two-room apartment. Plus, they expect that they will soon be able to refinance.
These hopes, however, are illusory. Most economists expect an increase in the key rate, which means that refinancing should not be expected in the near future.
— The assessments given by Nikita Stasishin and Mikhail Goldberg differ from what people think about the situation on the housing market, — Chairman of the State Duma Committee on Financial Markets Anatoly Aksakov is sure. — The difference in housing prices on the primary and secondary markets of 55% speaks for itself. The only winners in the preferential mortgage were the developers who sold apartments at inflated prices. Naturally, people overpaid for square meters in new buildings.
The deputy said that he has many acquaintances who bought new housing in the capital several years ago, and it seems that everything in the house has been sold, and there are very few neighbors. What does this mean? That people bought a second, third, fourth home during the preferential mortgage period — for investment purposes. There are also participants in family mortgages who allegedly bought housing for their child «for growth», and while he is small — they rent it out.
Such “entrepreneurs,” according to the most conservative estimates from developers, are at least 10 percent of the total number of those who entered the state program (in reality, according to economists, it is about a third). But the essence of preferential lending is precisely for Russians to purchase apartments for their own residence, and not for investing money.
At the same time, many borrowers who bought housing for themselves personally suffered due to the “floating” state of the preferential rates, which grew as soon as the key rate increased.
“We adopted a law according to which mortgage rates cannot increase by more than four percent from the base rate specified in the contract,” shares Anatoly Aksakov. “But this is clearly not enough to support borrowers. It happens that a person cannot continue to pay his mortgage, and banks sell the home for less than it is worth. The proceeds from the transaction do not cover the loan amount — and the person still owes. To avoid such schemes, we decided to grant the right of sale to the borrower himself. He will most likely do it more profitably for himself than an unscrupulous bank, and will cover the loan amount.
Obviously, it was necessary to exit preferential programs earlier. However, experience has been accumulated, and now more competent public policy will be implemented, the deputy believes.