By the end of 2022, apartment prices may fall by 20% in total, and moreover, the authorities admit that there is a crisis in the real estate market. True, officials do not voice his reasons, they are painfully “inconvenient”. All forecasts of further movements are tied only to the situation with mortgage lending, people no longer have their own money. Meanwhile, the level of indebtedness of the population has long been beyond the critical line.
“Demand for housing in Russia by the end of 2022 will be 10-20% lower than last year. This decline will correspond to normal market realities, so there is nothing to worry about here. If demand begins to fall more strongly, the authorities will look for new support measures – to extend preferential mortgages for the next year or other proposals,” the Deputy Prime Minister said. Marat Khusnullin.
No big deal – that’s understandable. In the style of “there is no money, but you hold on”, here the authorities do not shine with originality. Something else is interesting: the vice-premier admits a greater decline in demand (prices, respectively, too), and sees only one option to keep the market from collapsing – to “turn on” mortgages more feasible.
7% per annum with a down payment of 15% of the value of the property – these are the conditions of subsidized mortgages. Plus, you need to belong to the category of citizens to whom it is due, and you will have to collect the wagon for certificates. However, the problem is different, with the current level of prices and falling real incomes, the number of those who can master the monthly payment is decreasing every day.
“The market needs a radical correction of prices, they must correspond to the income level of the population. In the meantime, our square meter is at the level of Germany, and salaries are ten times lower than German ones. Accordingly, prices should fall ten times, no less, then demand will recover. People are waiting for a strong drop in prices, and those cautious forecasts that periodically appear in the media are rather attempts to delay this inevitable phenomenon, ”the private realtor believes Tatyana Ivanova.
It is not clear what the officials are waiting for, the authorities are constantly talking about some kind of “price support”, but in reality everything is not so. It seems that the game is going in one direction – in favor of construction companies. Say, if everything falls, they, poor things, will go bankrupt. Yes, they are on their way!
“Sellers cannot raise prices due to low demand, but they are not ready for their radical reduction – nominal prices for new buildings continue to rise, and these markets are strongly connected with each other. In the fall, multidirectional factors will influence the market: on the one hand, the Central Bank’s policy to reduce the key rate stimulates the influx of mortgage buyers into the market, on the other hand, there are still risks of a deterioration in the situation with employment and real incomes of the population, ”says the head of CIAN.Analytics Alexey Popov.
The prices for new buildings, indeed, are exactly nominal, you can’t say otherwise. Demand for apartments in new buildings, according to the most optimistic estimates, clearly corrected for the better, fell by half. In fact, as salespeople admit, there are almost no deals at all.
“I believe that by the end of May 2022, demand will decrease by three to four times compared to the same period last year,” admits the managing partner of Metrium Hope Korkka.
Well, this is closer to the truth, although this picture is also embellished. After all, if you start trumpeting publicly about the lack of demand and the “correction” of prices, then the reaction of potential buyers will be simple – do not take anything until everything settles down. That is, until the market shows a “bottom”.
But on this topic, no one undertakes to talk about the fall in prices at times, representatives of developers and large real estate agencies refuse to talk even in a purely theoretical vein. Because they are scared. Although what to fear is not very clear. When this happens, the benefits for the Russian economy will be unequivocal and very significant.
Modeling this situation and the consequences is quite simple. Let’s say prices fell tenfold. Of course, not immediately, such a collapse can happen in two or three months. In the course of the fall, the process will be constantly aggravated by the actions of the so-called “investors” who bought the property with the expectation of resale. These figures are prone to panic and, if signs of danger appear, are ready to drain their assets at the prices that are on the market. What aggravate the “dive”, and their position, too.
The ruin of large, government-related, and other building structures in these conditions is quite obvious, even the collapse of the entire industry for the construction of multi-storey housing. This process, as you might guess, will lead to an equally sharp drop in demand for building materials and an adequate reduction in prices for them. However, there is no need to talk about collapse here, with a penny cost of rolled metal products, bricks, cement and other building materials are now sold at huge markups. The rate of return is almost like on drugs!
Available building materials stimulate individual housing construction, and the construction of new high-rise buildings will also resume after some time. But already with completely different prices per square meter, somewhere at the level of Turkey and similar countries. For reference: in Turkey, the cost per square meter (if you do not take into account expensive Istanbul and Antalya) is at the level of $500 per square meter. In Russia – again, we throw out Moscow – 160,000 rubles ($2,500). That is, the potential for a fall by a factor of five is already visible, and given the economic problems of the Russian Federation, in general, the “bottom” is even lower.
About the capital ($ 4500-5000 per square meter on its periphery and endlessly in the center) there is no need to talk about the reasonableness of prices at all, they are simply beyond common sense.
“Prices for apartments in Moscow have long been out of touch with effective demand, so the mood of consumers is understandable. Most likely, the decline in prices that started in May will continue: with the current exchange rate of the ruble and falling incomes of the population, current prices already look completely inadequate, ”explains the head of the Real Estate Market Indicators AC Oleg Repchenko.
Ordinary Muscovites have quite small incomes, and young families in the capital cannot afford anything at all. The situation is not just wrong, it is deliberately wrecking and openly anti-Russian – there are fewer and fewer indigenous people left in the city.
Taking a loan is not an option, according to statistics from a year ago (for some reason, more recent data is not published), in the summer of 2021, the average debt burden on the average Russian reached half of his income, and the total debt exceeded 23.9 trillion. Rubles.
There is nothing more to “support” the market, that is, speculators with apartments – the financial possibilities of people have completely dried up. However, this has already been mentioned above.
Therefore, apart from the downward movement of prices, there is simply no other option now, a collapse in the real estate market is inevitable. However, from the point of view of an ordinary person who considers square meters as housing, and not as an “investment”, nothing bad will happen. On the contrary, new opportunities will appear, for example, to rebuild a dacha or a country house for sane money.