A real estate market that runs on its own. Moscow housing prices may fall sharply Falling real estate market

The real estate market is the segment of the economy that reacts especially sharply to crisis processes. The negative dynamics of oil prices, the instability of the ruble exchange rate, and the slowdown in economic growth are contributing to a fall in housing prices. What will happen to real estate prices in 2019: should investors invest their money in houses and apartments now or wait for better times? Authoritative experts give answers to this question.

What factors influence the Russian real estate market?

The Russian economy continues to operate in a crisis, and therefore the real estate market also remains in a very tense situation, due to:

• An active decline in demand, which is provoked by an increase in mortgage rates and the reluctance of citizens to make large purchases in an unstable macroeconomic situation;
• A decrease in construction volumes due to rising prices for materials and more difficult conditions for obtaining bank loans for developers.

It is worth paying special attention to factors that negatively affect the functioning of the Russian real estate market:

• Extension of sanctions by Western countries, which prevents domestic banks from accessing cheap external sources of capital and excludes the possibility of reducing interest rates on housing loans.
• A decrease in the real income of citizens, which does not allow them to make onerous mortgage payments.
• The fall in the ruble exchange rate, putting holders of foreign currency mortgages at an extremely disadvantageous position.
• Complicating conditions for obtaining housing loans, which is reflected in rising interest rates and tightening requirements for borrowers.

Considering the above circumstances, experts believe that 2019 and 2020 will be the most difficult years for the Russian real estate market. According to sociological surveys, even in the current 2019, every 10th Russian postponed the purchase of housing for several years, and every 6th decided to postpone this event for an indefinite future. Therefore, in 2019-2020. there will be a significant reduction in demand.

Recovery will only occur in 2019-2020. influenced by falling mortgage rates, the implementation of government support programs in the real estate sector and assistance from regional authorities.

What do the experts say?

The reduction in demand in the Russian real estate market in 2019 will provoke a further decline in prices of houses and apartments. This forecast is given by all experts without exception.

Professor of the Russian Economic University named after. G.V. Plekhanov, leading analyst of the Russian real estate market Gennady Sternik

In 2019, the likelihood of deepening stagnation in the market for residential and non-residential properties is extremely high. The market recovery will begin only in 2020. As a result, Russian realtors should prepare for an active reduction in the cost of objects. The situation will be complicated by the fact that developers will reduce the supply of real estate in response to falling prices. At the same time, next year can be considered the most favorable time for investment, which can definitely be sold at a higher price later.

President of the Russian Guild of Realtors (RGR) Tatyana Demenyuk

Real estate prices will fall even further in 2019. The minimum reduction will be 5-7%. However, it will be possible to judge how much the market price can realistically be reduced only at the end of the year. First of all, the fall will affect old housing (built in the 60-80s) on the outskirts, which has low liquidity.

President of the Ural Chamber of Real Estate Eduard Bogdanov

If 2016 was comfortable for buyers of real estate, since the market presented them with a significant number of options, giving them the opportunity to bargain and wait, then in 2019 the situation will be different: along with a significant decrease in value, there will be a reduction in supply by approximately 40%.

Executive Director of the Guild of Builders of the Urals

In new buildings in 2019, real estate prices will decline, which will lead to a “freezing” of the primary real estate market. Developers will not want to work at a loss and will therefore reduce supply.

Thus, the forecasts of most analysts predict a further decline in prices for the Russian real estate market in 2019. However, there are also opinions according to which the segment of purchase and sale of houses and apartments will begin to be rehabilitated in 2019 due to the gradual stabilization of the economy. This point of view is shared by the head of Sberbank German Gref. However, the exact picture of the cost, demand and supply of houses and apartments in Russia will only be clear at the end of this year.

In 2015, I already wrote an article about my forecasts for the future of the real estate market. This year I decided to continue the tradition and write a real estate market forecast for 2017 and 2018. Since I am a realtor in Moscow, I make a forecast of the real estate market in Moscow.

I would like to start my analysis with the fact that there has always been demand for real estate! Real estate is a necessary commodity. Only the solvency of buyers could decrease, and not their number. Also, I do not believe that what is happening in the market now can be called a crisis. The crisis happened in 2008. And what has been happening in the Russian economy since 2015 can be described in one word: access to easy money is closed! And for everyone, from the ordinary citizen to the state. So we're just living in a real economy period. And all talk about the crisis must be attributed to the geopolitical redivision of the world. And since I touched on politics, I cannot mention the fact of the future presidential elections in the Russian Federation. I assume there will be a slight saturation of the market with money, which will slightly affect the solvency of buyers.

In 2016, the number of offers on the residential real estate market reached a historical maximum. And apparently, in the coming year, the volume of new housing commissioning is not going to increase. I suppose we will still see major bankruptcies of some developers. If we recall the situation on the market for new buildings ten years ago, all apartments were sold out at the initial stage of construction. Now the situation has changed dramatically. There are built houses in which more than half of the apartments have not been sold. Moreover, a large number of such apartments are already finished or with high-quality repairs. And this entire volume of unsold new buildings is in direct competition with apartments on the secondary real estate market. Because the price in new buildings is lower (or the same), the quality is in most cases higher and after purchase you can immediately move and live.

What do we actually have?
1. Consumer demand has not decreased, but only reduced its solvency.
2. The number of offers on the market exceeds demand and continues to grow.
3. The crisis has been sluggish for several years and continues to maintain its stability.

Based on this, my real estate market forecast next - the market will continue its trend towards a slow but sure decline in prices. This will continue smoothly over the next two years. I do not expect sharp price drops, nor any increase. Market dynamics indicate that the annual projected decrease in the value of real estate will occur within 5-10%.

What to do in this situation?
The first and most basic advice is to be realistic and study real estate market forecasts. You must understand that there will no longer be a buyer on the market ready to buy your apartment without looking or haggling. Before making a purchasing decision, the buyer will study all the numerous offers and choose the best and cheapest from them. Therefore, if you want to sell an apartment, look at the market dynamics six months in advance. Simply put, if you want to sell an apartment now, set the price for it that will be for it in six months. Or you will find yourself in one of the train cars standing on a siding. Also, it is worth taking into account the changing mentality of the Moscow buyer. Today, the buyer, in most cases, will give priority to new modern housing in the nearest Moscow region, rather than buying an apartment for the same money in old five- or nine-story buildings in Moscow.

A ?
You should no longer count on a sharp decline in real estate prices. Yes, as I already wrote, prices will slowly decline in any case. But what does the buyer need? Solve your housing problem, but a wait-and-see attitude, taking into account annual monetary inflation, will not solve anyone’s problems. The best buyer position in the real estate market, buy now the best property at the best price.

Well, what should those who want to invest money in residential real estate for investment purposes (rent out or sell at a profit in a few years) do? I want to disappoint you right away, this event is doomed to failure from the very beginning. The maximum you can get now by renting out an apartment is 4 or 5% per annum. Don't forget to subtract property taxes, income taxes, depreciation expenses, and things get even sadder. And I don’t see any point in talking about hopes that will be more expensive in a few years.

This is how it seems to me, based on my knowledge and professional experience. Could I be wrong? Certainly can! Unfortunately, in our country, any analysis can be crossed out with the stroke of the pen of one of the powers that be. But here I am powerless.

Real estate market analysts assessed how the cost of apartments in the primary and secondary markets of the Moscow region will change

The outgoing year in the real estate market of the Moscow region was marked by large discounts: realtors every now and then reported the share of discount transactions, and Rosreestr reported an abnormally large number of transactions - both in the secondary and primary markets.

To find out how the market will behave, RBC Real Estate asked analysts what they think about changes in housing prices in Moscow and the region in the new year, 2017.

— The most important trend in the secondary market of Moscow housing is a slow but sure decline in prices. In January, the median cost of 1 sq. m reached 185.9 thousand rubles. - and this became the maximum value for the entire year. At the end of November, this figure reached a minimum of 181.4 thousand rubles. Such a price slide remains unnoticeable for some real estate market players, especially for ordinary consumers, as it amounts to only 0.3-0.5% per month. As for the real reduction in sales prices (and not the cost of supply), over the year it is at least 10%, since in most cases transactions on the secondary housing market in Moscow take place at a discount: in January the share of sales at a discount was equal to 82%, in November - already 86%. Based on the results of the last months of 2016, the average purchase budget also decreased: from 8 million rubles. in August to 7.85 million rubles. In November.

We expect that in 2017, real estate prices in the secondary housing segment will remain at the same level as now, or will continue to decline by approximately 5-7% per year. We do not see any reasons for prices to rise in the near future. As for the notorious price bottom, which has been mentioned so often lately, then, according to our forecasts, the market will reach it only in 2018 or 2019.

— We expect that prices for new buildings in Moscow in 2017 will increase within the limits of inflation - that is, by no more than 6% per year. This is due to the fact that developers are trying to maintain their market share and maintain the pace of sales. An additional reason for the rise in prices for new housing can be the emergence of new infill development projects within the Third Transport Ring. The supply volumes in such houses are small, but the overall price level is, as a rule, higher than large projects on the site of industrial zones.

In New Moscow and the Moscow region, the price level for new buildings will remain virtually unchanged. The trend towards a decrease in the share of new projects on the foundation pit is also typical for these locations, but the increase in prices during the transition to the next stages of construction here is complicated by increased competition. It will be more important for developers to maintain targets for sales rates, perhaps to the detriment of meeting the model of price increases as construction readiness increases.

In the secondary market of Moscow and the region in 2017, one can expect a slow increase in prices - within 4-5% in annual terms. A significant volume of supply will not allow prices to rise above inflation, and in order to complete transactions, most sellers will have to reduce their stated price levels - however, the size of the discount will gradually decrease. Average prices in the Moscow region are now becoming increasingly difficult to analyze, since a significant part of the lots presented in the active supply are set at prices that are based on the current level of effective demand. The slight increase in the average price level, which has been observed recently, reflects an increase in the share of these lots, and not the natural behavior of the market. Also in the new year, the trend towards an increase in the share of mortgage transactions will continue.

One of the long-term trends driving demand in the housing market in recent years is the long demographic cycle. The generation born in the first half of the 1980s entered the age of greatest demand for transactions. Since their consumer habits were formed already in the post-Soviet era, the greater attractiveness of modern new buildings (compared to outdated Soviet housing) fits into this pattern.

In general, developers start with the secondary market and, as the past year shows, they are winning this competition due to more effective advertising campaigns, discount opportunities, and effective installment and mortgage programs. The practical expression of this trend is the flow of buyers from the secondary market to the primary market.

— Effective demand is very limited, since household incomes are not growing. The relative stability of demand is supported by lower prices and bargaining on the secondary market and an increase in the number of budget new buildings in Moscow, where you can now buy an apartment for 3-4 million rubles. Attempts to raise prices in response to the revival of demand fail: people cannot afford more expensive properties, so they would rather refuse the deal than pay more.

As a result, the downward trend in prices continues in the market. The depth of the drawdown depends on the volume of supply, which has grown significantly in recent years. In 2016 alone, the supply volume in Old Moscow increased by 2.8 million sq. m. m of housing. Many projects are still on paper, but may enter the market in the coming years. Demand cannot keep up with this growth in volumes, therefore, if developers do not slow down the pace of launching new projects, prices will continue to decline steadily by about 10% per year and over the next five years they may lose 30-40% in price.

— In 2017, the average cost of housing on the primary market will grow moderately within 8%. The weighted average price at the end of 2016 was 238.2 thousand rubles. for 1 sq. m (excluding elite supply), annual growth was 1.4%. The price dynamics of new buildings are influenced by two multidirectional factors - on the one hand, the increase in prices is facilitated by an increase in the construction readiness of projects, on the other hand, it is pulled down by the release of new projects at the initial stage with a lower cost. In 2016, growth factors prevailed, as large-scale integrated development projects that entered the market in 2015 increased in price.

For the secondary market, the forecast is quite pessimistic: the price decline, which was observed throughout 2016 and reached an average of 15% across the entire market, will continue. For an old “panel” older than the eighties, the price reduction can be 8%, for newer monolithic houses - 5%. Stabilization of prices without worsening the decline can be expected in certain narrow locations - for monolithic houses in a number of prestigious areas within the Third Transport Ring with limited supply in new buildings. Also, prices most likely will not fall for new panel houses, since this is a popular product on the secondary market due to its lower budget compared to a monolith and higher quality compared to old panel housing construction.

— Prices will rise the most in the Moscow region: we predict an increase in the cost of 1 sq. m. m for new buildings in the Moscow region within 5% for six months. Positive dynamics will be facilitated by the systematic recovery of the macroeconomy and, consequently, an increase in the solvency of buyers. Private investors hoping to make a profit from the sale of real estate will return to the market. The second reason for the rise in price of new buildings near Moscow will be the reduction in the volume of construction in the region, which is associated with the urban planning policy strategy of “live, work and relax in one place.” The trend is confirmed by the reduction in the number of new residential projects: at the end of 11 months of 2016, there were 2.5 times fewer than a year earlier. The volume of supply of new buildings in the Moscow region will continue to decline further.

Stable demand for housing in the Moscow region will be facilitated by loyal pricing. Today the average cost of 1 sq. m in the region, even in the closest projects to the borders of Moscow, is almost two to three times lower than in a similar segment within the Moscow Ring Road, and 20% more affordable than in New Moscow.

As for Old Moscow, we predict a restoration of the traditionally high share of new buildings in the supply volume of business class and above, which will have a positive impact on the average cost of 1 sq. m. m. The trend of restoring the traditional structure of supply within the Moscow Ring Road intensified in the second half of 2016 and at the end of 11 months of 2016, the share of expensive projects (business class and above) within the old boundaries of Moscow increased by 7 percentage points - now it is 45% of the total volume of new buildings.

However, with a qualitative change in the structure of supply in Old Moscow, an increase in the average price of 1 sq. m. m will be restrained by the constant release of new projects. Nevertheless, the traditionally crisis phenomenon - the predominance of mass segment projects - will gradually leave the capital market. The current market conditions for new buildings in the Moscow region create expectations of a gradual recovery of the market and the beginning of a gradual rise in prices next year.

The dynamics of prices on the secondary housing market, as a rule, correlates with the dynamics of prices for new buildings with a time lag of three to six months. Thus, as the market for new buildings recovers, we should expect a revival in the secondary housing market and, consequently, an increase in prices.

— The capital’s secondary market will extend its stay in a protracted depression. There will remain pressure from new buildings that have fallen in price greatly, and there will also remain a large “overhang” of unsold old apartments. At the same time, we will not see any noticeable reduction in ruble prices - the market correction has long been driven by inflation. To launch a spiral of price increases, a stage of hyperinflation is required, which the current government cabinet is unlikely to dare to enter.

The primary market is in a slightly more favorable situation, however, here too the supply of apartments is increasing, which will prevent direct price increases. However, the price dynamics here will initially be due to the abandonment of the current level of discounts (8-15%). As a result, in 2017, developers will have to pass another survival test.

In short, the apartment market of 2017 will remain a buyer’s market, which will receive both a rich assortment and price flexibility from apartment owners. Only a hyperinflationary scenario can reverse this situation.

Serious crisis phenomena in the Russian and global economies contribute to stagnation in the housing market, lower prices and, accordingly, a fall in real demand of the population.

The situation in the real estate market today is characterized by a decrease in sales volumes, a fall in prices for residential properties of the old stock, a decrease in the total number of transactions and mortgage loans issued by banks.

Such trends have been formed gradually, over the past 2-3 years, due to the following reasons:

• the introduction of political and economic sanctions against Russia, a ban on the acquisition of securities by large Russian investment companies and private businessmen abroad;
• increasing the cost of new buildings being built;
• reduction in volumes and, as a consequence, bankruptcy of construction companies;
• a decrease in the solvency of potential buyers and the lack of stable growth in their income, difficulties in paying off debt;
• instability of exchange rates, which creates a problem with mortgages in foreign currency when converted into Russian rubles;
• increasing interest rates on newly issued mortgage loans and tightening bank requirements for potential borrowers and collateral;
• term limits and subsidies.

All this had a negative impact on pricing processes in the housing market, sales and rental volumes of residential properties.

Supply and Demand Relationship

Most of the forecasts of Russian economists boil down to the general opinion that in 2017 we should expect a continuation of the general trend of recession and falling real estate prices. If in 2015-2016 there was a gradual decline in the income of citizens and the demand for housing and commercial real estate, then in the next year it is possible to reach the “bottom” or collapse of the market.

Moreover, this process will be protracted, lasting from 2 to 4 years.

The phase of rapid decline will be characterized by the following phenomena:

1. new housing will most likely strive to minimize risks by reducing the volume of commissioned space, and will choose the construction of only financially profitable objects as the main direction of their activity. This policy will lead to a permanent reduction in the scale of real estate commissioning.
2. The level of solvency of the Russian population will continue to fall rapidly and the purchase of real estate or improvement of living conditions will become secondary. The level of demand decline in this situation is projected to be 30% compared to the current year. This will lead to a freeze in the construction of new buildings, an increase in the share of unsold space within a new home to 50% and a shift in emphasis to the secondary real estate market.
3. The situation on the secondary market will be ambiguous. From the beginning of 2017, the state subsidy program with preferential interest rates for the purchase of new housing will be abolished. This will lead to attracting a share of buyers from the primary market. Considering the categories of real estate on the secondary market, it is expected that the cost per square meter in the old stock will become cheaper with a similarly declining demand, and prices for luxury apartments and commercial space will remain at the current level or decrease slightly. This is usually due to the lack of flexibility of sellers and their reluctance to reduce the price under any circumstances (even if the sales process is delayed for a long time).
4. The reluctance of banks to reduce annual rates on mortgage loans, stringent requirements for real estate and potential borrowers will also contribute to a fall in the volume of their mortgage portfolios, which will negatively affect the level of demand.
5. The commercial and residential rental market will be similarly affected by crisis phenomena in the form of a strong collapse in the volume of rented premises. In the residential real estate segment, tenants will focus on apartments and rooms with smaller areas and low monthly rents. In the category of commercial properties, the trend of a significant reduction in the cost of 1 square meter will continue in order to be sold by any means. In 2017, this market will be more affected by the issue of imbalance between supply and demand towards a strong imbalance of the latter.

Stabilization of the current situation is expected by 2019-2020.

It is by this period that the start of recovery and a gradual return to pre-crisis levels is predicted.

Housing price level in 2017

Most experts who predict the development of the real estate market in the near future do not dare to voice specific figures and housing prices.

The situation will have an individual scenario in each specific region. Moscow, St. Petersburg and some other largest cities of the Russian Federation will most likely experience a period of sharp price decline.

In the context of new economic realities, the cost will approach its real value, which will only have a positive impact on the further development of the housing and commercial real estate market.

Some experts voice the opinion that prices will fall next year by 5-7%, others expect a decline of more than 10-15%. Let's analyze the forecasts and conclusions of leading Russian real estate experts.

Real estate experts' opinion

The head of Sberbank of Russia G. Gref gives a forecast for the development of the Russian real estate market, based on the fact that positive dynamics will be observed only in relation to demand. According to him, most investors expect an even greater rate of decline in prices on the secondary market. And despite the relatively favorable prices of residential real estate, growth is not expected in the next few years.

2016-2017 is a favorable period for investing without the possibility of obtaining a quick margin. To do this you will have to wait about five years.

Professor of the Russian University of Economics G. Sternik suggests a decline in the real estate market in Russia since 2017. In his opinion, prices and demand for housing will decline at least until 2019. Next year the real estate market will reach its lowest point. A large number of newly constructed new buildings will be frozen, construction companies will refuse to undertake large projects due to a sharp drop in the solvency of the country's citizens. The crisis will hit small cities the hardest, where the decline in the volume of transactions will be more noticeable than in cities with a population of over a million.

The forecast presented by the Ural Chamber of Real Estate also assumes the development of a crisis in the Russian real estate market. There will be a sharp decline in sales volumes in 2017-2018. To a greater extent, this will affect housing from the old stock, as well as those built on the outskirts of cities. This will oblige developers of new houses to improve the quality of construction and landscaping, thus attracting potential buyers.

The current year, according to the chamber's experts, is the most favorable period for purchasing residential real estate due to the presence of many profitable offers in both the primary and secondary markets. State support and lower mortgage rates in the near future will help to positively influence the situation on the real estate market.

The real estate market forecast for 2017 is negative in the field of construction of new buildings, as there will be a sharp decrease in supply and the freezing of many investment projects.

The crisis will lead to a clear imbalance between supply and demand with a clear predominance of the latter and a significant drop in sales volumes and prices for real estate.

June 2019: Price dynamics in the secondary market remain highly segmented. The situation in a particular location is mainly determined by the structure of the sentence. The cheapest options left the market during the boom in demand last year. Sellers, fueled by talk of a sharp imitation of apartments after July 1, when changes to 214-FZ come into force, are trying to raise prices for what is left. But not very successfully, because the cost of budget housing had already increased significantly in previous months. As a result, the main demand flows into the middle segments, which are no longer much different in price from the cheap ones. The main outsider of the market is still the overpriced business class. At the same time, the elite segment in the Central Administrative District, in anticipation of the same reform 214-FZ, on the contrary, went up. Most likely, the “stripes” in the market will continue until the fall, when the first results of the shared-equity construction reform appear. Read more about real estate market trends in the articles and reviews of the analytical center website:

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