Dec 29, 2020
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National Association of Builders Explains Why House Prices Are Rising

The explosive growth in the cost of metals exacerbated the situation in the construction industry, and now the margins of projects have dropped significantly throughout the country. It is in order to achieve the required degree of marginality that developers are forced to increase prices where effective demand still allows it. This was announced to by the All-Russian Association “National Association of Builders” (“Nostroy”).

However, the growth in housing prices is always limited by the income of the population, which is still falling, and this situation cannot be changed overnight, the construction industry association, which includes 222 self-regulatory organizations operating in 74 constituent entities of the Russian Federation, specified.

According to representatives of the country’s largest industry organization, the volume of housing offers on the market will fall in 2021, unless urgent measures are taken to stabilize the cost of basic building materials (rebar), as well as to support low-margin regional housing projects.

At the moment, was informed, a program of subsidizing such projects is being prepared.

The housing market is currently undergoing major changes: the industry is switching to a new financing model. In order to receive project financing, it is required that the project has a high profitability, at least 15%. In many regions, housing projects do not have such profitability and, accordingly, cannot receive project financing. In this regard, we are now seeing a decrease in the volume of new projects entering the market. The volume of current construction is falling in all regions, and in the country as a whole, the decline as of December 1, 2020 was 13.2%, – stressed in “Nostroy”.

The Association “National Association of Builders” added that next year, a significant increase in the cost of housing is not expected.

Recall that earlier the FAS called on the Ministry of Industry and Trade to introduce export duties on steel products for six months.

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