Sales of new buildings in the Moscow real estate market in April 2022 fell by half at once, in the Moscow region – even more. There is no excess supply of apartments, many construction projects are still in a “frozen” state, and their prospects are vague. But they are not needed. There is every reason to believe that the announced figures of the fall in demand are embellished, the real collapse of the market is much larger.
According to the Dataflat research, in April 2022, only 9.5 thousand transactions were registered on the market of new buildings in Moscow and the Moscow Region, which is 48% less compared to March. The most significant reduction in transactions in the Moscow region – minus 54%. Prices do not fall, on the contrary, developers even raised them a little – by an average of 4%.
The numbers are more than strange. Given the complete collapse of the mortgage market, it would be worth talking about a complete halt in sales. But there is some incomprehensible information about the mortgage.
“The share of transactions in the residential real estate market in Russia with the attraction of borrowed funds in Russia in April fell to a record low of 30.4%. This is 24% lower than the average value of last year, when 54.4% of transactions in the real estate market took place with borrowed funds,” says the director of the federal company “Etazhi” Ildar Khusainov.
Perhaps somewhere – in some mythical prosperous regions – half of the real estate last year was bought with their own money, but definitely not in Moscow and not in the Moscow Region.
“More than 90% of the buyers were mortgage lenders, there have been practically no people with their own money for a long time, just a few. Prices are simply exorbitant, so those who need to improve their living conditions were forced to get into debt bondage. But now you can’t take a loan, and the rates and conditions are simply unrealistic. There are basically only “alternative” transactions in the secondary market,” says a private realtor Tatyana Ivanova.
The prices are really unrealistic. And the above 4% of their growth is a kind of “average temperature in the hospital.” Also not very real. In some places, the increase is 10-15%, such cases are far from uncommon.
About 350-360 thousand rubles per square meter on average for Moscow new buildings – the prices are quite European. In terms of the single currency of the EU – 5000 euros. In Germany, just such a price level, and far from everywhere, in some places it is noticeably lower. However, salaries there are “slightly” different – the average German monthly pay in 2021 is 4,100 euros before tax, or 2,700 euros “net”. Translated into rubles – 190 thousand. Yes, you can get a mortgage. Moreover, the rate there for such a loan is at the level of 2% per annum, not higher.
C why in Russia then such high prices for real estate? In theory, they should be several times lower. In full accordance with our salaries. Theoretically, in the interests of the state to make housing affordable, this will dramatically reduce “social tensions.” But a completely different thing is observed – despite the fall in incomes of the population of the Russian Federation, the cost per square meter is steadily growing. Perhaps this process should be reversed?
“This is unprofitable for developers. As soon as prices begin to decline, sales volume will also begin to fall. After all, as buyers think: yeah, prices began to decline, I’ll wait a bit with the purchase of housing – for sure a square meter will become even cheaper. Therefore, developers are ready to arrange promotions, give imaginary discounts – in the form, for example, of a subsidized mortgage – but will not reduce prices to the last. There are very few Russians who are ready to buy an apartment now. Therefore, the state comes up with new support measures in order to create at least some demand for new buildings, ”says the CEO of Relight Real Estate Konstantin Barsukov.
It turns out that all sorts of programs of “preferential” mortgages – subsidized at the expense of the state budget, that is, people’s money! – officials support the business of the oligarchs from the construction industry. And they encourage them to rob the people.
In a good way, real estate prices in the Russian Federation are inflated at least five times. And then at ten. For comparison: in Istanbul, a square meter costs about 400 euros, in Ankara – 200 euros. At the beginning of May 2022, the average salary in Turkey in terms of our banknotes was about 29 thousand rubles. In other words, everything is about the same. As a result, we are living beyond our means. That is, our apartments are prohibitively expensive.
A sharp decline in real estate prices will have the most positive effect on the Russian economy as a whole. First of all, the prices for building materials will drop just as significantly. Which, despite the powerful strengthening of the ruble, do not even think of falling.
For example, everyone knows that the cement market in Russia is monopolized, the Deputy Prime Minister also spoke about this recently Marat Khusnullin. And he warned that “this needs to be dealt with.”
“Competition is developed in the Russian cement market, which does not allow us to talk about its monopolization. The average annual growth rate of cement prices, taking into account delivery over the past ten years, amounted to 2.7%, ”the chairman of the board of the Union of Cement Producers Soyuzcement immediately replied. Vyacheslav Shmatov.
Whereas only over the past year, cement has risen in price by at least 30%, and in a number of regions – at times. And all the past years, this product is by no means cheaper. So, right in the eyes – we call black white, and vice versa.
The situation is similar with rolled metal products, lumber, bricks and everything else. Everything is exorbitantly expensive, the rich earn super profits – they rob the people. Moreover, while still exploiting the Soviet “legacy”, they do not invest anything in the country’s economy, they only withdraw funds abroad.
Undoubtedly, after the inevitable collapse in prices, construction billionaires will run with outstretched hands to the government. And it would be worth hitting hard on these hands, best of all with a stick. In that Turkey, after all, developers somehow live, cement and everything else there is by no means free. So ours can too. Especially if one of the construction oligarchs, as a preventive measure and to create “greater friendliness” in their community, is assigned to places not so remote. For what – there is, there are not even questions.
The market has already gone down, and the above figures of falling demand for new buildings and the volume of mortgage transactions indicate that they are trying to contain this process. Large real estate companies and all sorts of “analysts” work together with developers, therefore, you should not particularly trust their numbers.
“No one took out a mortgage in April. You have to be crazy to subscribe to such interest. Moreover, in an atmosphere of complete uncertainty with prices, ”says Tatyana Ivanova.
In the secondary market, the cost per square meter has already sank by at least 10-15%, and this is again according to the “cautious” estimates of realtors. To all appearances, the avalanche has already started and further price collapse will go much more fun. While everyone is looking back at the new buildings, but this is not for long. After all, if there is a reasonable alternative in the secondary market, it will simply become unclaimed.
The most important thing is that in this situation the authorities do not follow the lead of the oligarchs. And they did not squander much-needed Russian budget funds to support the construction business. Whoever survives will survive. Moderate appetites and will build affordable housing available to ordinary citizens. And greed, as you know, always leads to poverty.