Experts say that against the backdrop of collapsed demand, the cost of "used" square meters will begin to decline markedly. They have a special forecast for the end of this year and for the whole of 2023.
Primary versus secondary
The cost of "primary" and traditionally more expensive "secondary" is almost equal. And in some cities, ready-made housing is already cheaper than a new building. One of the interlocutors of "NI" called such a bias "an ugly market model", but this trend is unanimously confirmed by all the interviewed experts.
President of the Russian Guild of Realtors Irina Zyryanova specifies that the real estate market of Moscow and St. Petersburg is still holding itself apart, but even there the situation is beginning to change.
“There are huge migration flows in both capitals and, accordingly, the investment component of the purchase is also higher than in the regions. True, analysts have recently noted that in certain administrative districts in Moscow, the average prices of "primary" are already compared with "secondary" and even become higher. So some kind of a change in prices between the markets and in Moscow is beginning to be observed, ”specifies the head of the Russian Guild of Realtors.
Nadezhda Korkka , managing partner of Metrium, confirms that this is a new phenomenon for the Moscow market, which will begin to weaken only if the economic situation changes. “If the solvency of the population increases, the supply will be significantly reduced or there will be incentives for buying apartments in the secondary market, for example, preferential mortgages,” Nadezhda Korkka believes.
The bubble popped...
The new trend is partly due to the fact that the real estate market as a whole has developed abnormal prices. In 2020-2021, the price bubble quickly inflated due to subsidized mortgages and low loan rates. In the early spring of 2022, but already due to panic, real estate, both “secondary” and “primary”, continued to rise in price intensively and unreasonably.
According to IRN.Ru experts, last spring the housing cost index on the wave of excitement only in "old" Moscow increased by 7.3%, by 2.9% in New Moscow and by 6.3% in the Moscow region. In some segments, the increase from last year's price tag reached 10%.
…but demand collapsed
RN.Ru experts have calculated that since April the demand for apartments in Moscow has decreased by 38% compared to March and by 34% compared to April last year. Sergey Menshenin, an analyst at the Novosel real estate agency, also noted that the demand for “secondary properties” during the crisis, compared with 2021, decreased by 30-40%.
After the April-May “bottom”, when the real estate market just stood up, prices in the secondary housing market began to decline not significantly, but in the range of 0.5-3%.
According to certified RGR analysts, prices in the secondary market have now stopped decreasing in most of the largest cities of the Russian Federation. But they stopped growing. The average price tag in the regions, with the exception of Moscow, St. Petersburg and Sochi, still varies from 75,000 rubles per square meter. m up to 135,000-140,000 rubles/sq.m.
Price fall is inevitable
Experts believe that this is a temporary lull and prices for finished square meters will be forced to decline. “Prices have skyrocketed in the last two years. And flew too far. And they should roll back anyway. The “bubble” should start to deflate,” Sergey Menshenin believes. RN.Ru experts believe that housing prices should return at least to the level of the beginning of 2022, that is, lose 5-10%.
Irina Zyryanova adds that real estate market prices are now lower only in those cities where there is still a fairly large supply of apartments from the Soviet era of construction of the 60-80s of the last century. “For such apartments in the last 1.5 years, prices have not grown at a high pace, as in the modern secondary housing or in the market for new buildings,” Zyryanova explained.
The process of the price fall, apparently, will not be rapid, especially against the background of the current undulating bursts in the market.
Nadezhda Korkka notes that the secondary housing market, after falling in the spring, began to show signs of life. In June 2022, demand increased by 15% compared to May, and in July it grew by another 0.5%. “Yes, we note a much greater increase in transactions in the primary market. Here, their number increased by 69% from May to July, which is significantly higher than the increase in the secondary market over the same period (+ 15.5%),” the expert explained.
But at the same time, experts pay attention, for sellers of apartments now is not the best time.
“There was a very bad period since May, but already August was active. The sellers agreed to reduce the cost of apartments by 6-7% of the market”, - adds Sergey Mologin, founder of the Moskovsky Kvartal Academy of Sciences.
“Yes, buyers look a lot and buy nothing. Apparently, they are waiting for the sellers to agree to discounts”, - Andrey Menshenin adds.
Nadezhda Korkka agrees with her colleagues: “People have begun to leave applications for the selection of housing more often and call on ads. However, there is no correlation with the number of completed transactions. Customers are interested, but they are not in a hurry to buy yet. Over the past month, we see only a modest increase in the number of transactions in the "secondary".
Autumn and forecast for 2023
Director of the Academy of Sciences "Residence" Kirill Kazantsev believes that in the coming months the market "secondary" is unlikely to bounce back for a period of downtime. According to him, the decline in the number of transactions will continue and could reach about 20%.
Sergei Mologin believes that autumn will bring a surge, but then there will be a lull. “Until the end of the year, we can observe some market activity. Everyone is counting on an increase in transactions due to the correction of the mortgage rate - if the Central Bank lowers the key rate again. And due to the fact that people who thought that they would wait out the post-February events and turbulence finally realized that it would not be possible to wait out and would be forced to begin to resolve their issues. Sellers will become more accommodating, some buyers have appeared. Investors left the market, of course, and those who need to solve housing issues remain,” Mologin explained.
Hope Korkka also sees the prerequisites for a slight recovery in the secondary market this fall. “The economic environment is gradually leveling off, the need for housing has not gone anywhere, so demand will continue to moderate recovery. This is facilitated by mortgage rates that have reached acceptable values. In addition, now the buyer's market is on the "secondary market": the number of offers is growing faster than the demand for the exposed lots. If no new factors make their adjustments, then the sellers will continue to gradually reduce prices to stimulate demand”, - the expert noted.
Some market participants agreed that then, in the first half of 2023, the “secondary”, of course, will not fall into a coma, but is unlikely to avoid a period of deep stagnation. At one point, both the shortage of offers and low buying activity will converge. And discounts from sellers of economy-class apartments (up to 20 million rubles), depending on the location, will remain at the level of 6-7% and may even go beyond 10%.
Specialists announced a more favorable forecast only for the second half of 2023, when the market will begin to move due to pent-up demand. But, experts say, the forecast will work only if the country's economy does not face another shock.