Posted 22 ноября 2022,, 08:05
Published 22 ноября 2022,, 08:05
Modified 24 декабря 2022,, 22:38
Updated 24 декабря 2022,, 22:38
How will the primary market react to the current crisis and behave in the long term, why the price bubble cannot burst, but prices for new apartments will also stop rising. Whether preferential mortgages from the state and subsidized mortgages from developers will really be cancelled, what share of buyers developers will lose and how quickly they will be able to return customers - Kirill Kholopik, head of the portal "Unified resource of developers" explained.
- Will developers fulfill their plans to commission housing in 2022, taking into account new factors - SMO, partial mobilization, sanctions? Wait and whether there are no long-term construction?
-In 2022, developers are fulfilling their plans to commission housing. Because there is a system of project financing. And there were no failures in the financing of construction work in 2022 and are not expected.
There are separate objects for which there are problems associated with sanctions . In them very high- tech equipment, which is not produced in Russia, can be used . But these are single objects of business and premium classes. There, perhaps, the terms will shift a little , but these are not typical cases.
- For some quarters, the drop in sales reached 40-50%. With such statistics for 2023-2024, will developers have to adjust their commissioning plans?
- Yes, we foresee a slight decrease in housing commissioning, which has already been observed for the last five months . This is due to the fact that in 2019-2020, due to the reform and introduction of escrow accounts, fewer objects were declared than in previous periods. That is, houses will now be rented out, the construction of which began during the recession against the backdrop of lapping and banks and developers.
Then there was a serious constraint on the withdrawal of new projects. This, of course, is now reflected in the input dynamics . We have already seen a monthly decrease in the volume of commissioning of apartment buildings since June, and most likely it will last until the end of 2023 and even affect the beginning of 2024 . In 2021, on the contrary, there was an increase in the output of new projects, that is, in 2024, the next cycle of growth in the commissioning of new housing is expected .
- Sales have risen, but construction plans are not being revised?
- Sales by themselves , taking into account project financing, have little effect on such an indicator as housing commissioning. When a developer enters into a project financing agreement with a bank, both parties are interested in completing the facility, regardless of actual consumer demand.
If apartments are not bought, then borrowing becomes very expensive , and the developer may simply not earn anything on this project , or it may work in the negative. I repeat, both the bank and the developer are interested in completing the facility , regardless of the sale of apartments.
With a decrease in sales, developers are afraid to withdraw new projects, and banks are afraid to finance them . Poor sales are a strong deterrent to starting new projects. Thus, in recent months there has been a strong drop in the number of examinations of project documentation. This means that the rate of launching new projects in construction will soon fall.
- How much will sales of housing in new buildings drop by the end of 2022?
- After the explosion of the key rate at the end of 2014 , sales fell by 25% in the following 2015. We expect the same result in 2022 in relation to 2021. In the nine months of 2022, the fall has already amounted to 16%. In the fourth quarter , we expect an even greater drawdown compared to last year.
So the market will definitely lose 25% in units of apartments sold. But in money terms, the fall will be smaller due to rising prices.
-How much, in your forecast, sales will decrease if developers are banned from using subsidized mortgages at 0.01%, which the Central Bank is actively insisting on. And also from January 1, 2023, will the preferential mortgage at 7% end?
- There are two reasons for low sales. First - formation of pent- up demand a . Explosion of the key rate, SVO, partial mobilization , sanctions - because of this, many who are potentially ready buy a new building, postpone the purchase until the situation stabilizes. As a result, there is a huge increase in the money supply. People have money, but they do not buy anything expensive, they save.
The second reason - Decreased affordability of housing. According to Rosstat , the fall in household income in the third quarter was 3.4%. The average mortgage payment that citizens can afford has automatically fallen by the same amount. Only a low rate, subsidized jointly by the state and the developer, allows equity holders to withstand the market average monthly mortgage payment of about 30,000 rubles.
An increase in the current weighted average rate from 3.7% (with subsidies) to 11.5% (without subsidies) will lead to a sharp increase in the size of the monthly payment and cut off a huge proportion of potential buyers from the possibility of buying a new building. Moreover, the possibility of reducing it by increasing the term of the mortgage loan has already been exhausted. This indicator has reached 26 years and, most likely, will not grow any more.
If the subsidies are removed, then a much smaller number of projects will pass the so-called stress testing of banks . Obviously, this will become an additional obstacle to bringing new projects to the market , as was the case in 2019 .
- How noticeable will the fall be? What share of transactions accounted for preferential mortgages?
- In the third quarter of this year about 45 % of contracts for participation in shared construction were concluded using subsidized mortgages . That is a very high number. The consequences of the cancellation will be serious.
- That is, the abolition of two preferential instruments that were market drivers will bring down the primary?
- According to our surveys , developers do not allow the government to cancel subsidized mortgages. 93% of developers believe that it will be extended. Market participants simply do not believe that the government would make such an incompetent move . The abolition of preferential mortgages will actually bring down the housing construction market , which will lead to serious consequences.
Today, banks have obligations to developers under loan agreements for 11 trillion rubles. We see only 4 trillion rubles on escrow accounts. In other words, banks need to finance developers for another 7 trillion rubles so that they complete the projects they have begun.
The abolition of preferential mortgages is , first of all, a blow not to developers, but to the banking system. She will not receive an influx of money into escrow accounts, and banks will have to look for sources of financing for already concluded loan agreements for developers. Where they will get the funds from is unclear. It will simply be a very big shock for credit institutions .
Why do developers start subsidizing mortgages?
-Remember, in March there was a rush demand ? People, saving money, bought real estate. The builder even then exceeded sales targets . And many have raised their prices. This always happens when demand outstrips supply.
Prices for new buildings have soared quite seriously, by 15-20 percent . Time has shown that this rise in prices in March was not supported by rising incomes of the population or the availability of mortgages. Prices turned out to be somewhat inflated against the backdrop of a subsequent decline in sales. Therefore, developers began to use mortgage subsidies , the source of which was not so much a premium on the price (which the Bank of Russia is talking about), but rather the developer's profit. In fact, this is a hidden price reduction. The fee to the bank for lowering the rate to 0.01%, as a rule, includes 15% of the price new buildings and a premium to the price list paid by the shareholder. Due to these deductions, the bank subsidizes the rate reduction.
Now the Central Bank is saying: cancel the subsidized rate, do not covert price reductions, but open ones. But for developers, this is, in general, stressful. Because the price reduction leads to a painful reaction of those who in March bought square meters at a rush price . Many will begin to think about whether to terminate the contract under a fictitious pretext , return, for example, the 5 million paid then , and re-buy the same apartment , but for 4.7 million rubles. And such people go . Therefore, the actions of the Central Bank actually undermine relations in an already tense market.
- But the Central Bank explains the logic. In his opinion, the cost of an apartment in a contract with a mortgage at 0.01% is overstated by 20-30%. And it is already impossible to sell an apartment on the secondary market for this money.
- And where is the damage to citizens? First, the surcharge is usually 10-12%, not 20-30 % . Secondly, finished housing is more expensive than under construction just in the amount of the allowance . Indeed, the Central Bank concerned about other - save her budget funds. Now people on average take out a loan for 26 years, but in fact they repay it ahead of schedule within 7 years. Accordingly, the obligation of the state to subsidize such a loan for 30 years is removed ahead of schedule. At a rate of 0.01% , the probability that the borrower will repay the loan ahead of schedule decreases. The burden on the federal budget is growing. It's in theory. How it will be in practice , no one knows.
- You can't help but agree that the prices in the primary are inadequate. When will this bubble burst?
-Adequacy is determined by the market . There was even a queue for buying at these prices in March. So the prices were right.
- March is an exceptionally shocking situation, it is not indicative.
- Lowering prices only seems like a simple solution. It does not happen that in the chain the price of one thing grows, but the rest does not . The growth in the cost of apartments was followed by building materials . The statistics show this : in March , there was a huge increase in prices for building materials , followed by - for components for materials . And now getting everything back is not easy . All over the world , the cost of any kind of goods only tends to rise .
The idea that the bubble will deflate if developers just go ahead and lower prices is a utopia…
After all, for this it is necessary that all suppliers of products and services for construction also reduce prices by 20 % . Workers must also agree to a 20% pay cut . Reducing prices in the short term in the form of a temporary promotion is one thing. But the constant is not really without serious consequences. After all, someone in the chain will run into the fact that he will lower prices , but his suppliers will not. This is bankruptcy .
-What if they don't buy new buildings at all? You yourself said that only by the end of this year the market will drop by 25%.
-Banks won't allow prices to be lowered either. As part of project financing, the developer does not have the right to unilaterally rewrite the approved by the bank financial model , which is based on agreed prices . Banks , on the other hand , must fill up escrow accounts according to a certain plan in rubles. And they must see the sufficiency of funds to repay the loan. Reducing sales prices while maintaining the cost is not allowed.
In 2015-2016, many developers were forced to lower prices and sell at a loss so as not to stop the construction pipeline. Did they expect to sell part of the apartments in this way, and then compensate for the loss on the second part of the apartments. But the fall in prices dragged on. Those of the developers who had an accumulated airbag and were able to restructure the business to reduce costs survived. The rest went bankrupt .
- In other words: either the bubble "bursts", or the time of long-term construction and deceived real estate investors returns?
-Let's remember what happened in 2015-2016 . These are 220 thousand families of deceived equity holders, a huge amount of abandoned unfinished housing and at least 800 bankruptcies of developers. Plus about 500 convicts directors and shareholders of construction companies who were accused of fraud with a vague wording "accepted money from equity holders without intending to complete the construction".
If sales collapse now, then banks will have a shortage of funds to finance developers. Let's imagine a hypothetical situation that because of this will stop lending . Buildings will become.
There will be an obligation of banks to return the money to equity holders. But where will the money come from the banks? After all, all funds on escrow accounts are involved in project financing. Banks will require developers to repay loans ahead of schedule. But loans are invested in construction. They are all in disrepair. We will get a repeat of the problem that arose after the fall in sales in 2015. Deceived equity holders (only now they will be escrow investors), stopped construction, bankruptcy of developers.
To save the situation , the state will have to help the banks, provide them with the money they need to complete the construction of houses. And this will require a trillion ov rubles. I don't even want to consider such a scenario.
I predict that the government will extend the subsidization of mortgages and , since this is the cheapest solution to provide the banking system with the financing needed to complete the construction of apartment buildings. This is budget money, which is in short supply, but definitely not trillions of rubles.
- Is it possible to say that in 2023 prices in the primary market will at least stop growing?
- I believe that with reasonable actions of the Central Bank and the government, and I proceed from the fact that they will act reasonably, prices will stand still. There will be no decline, because, I repeat, this is a very big stress and damage to the market. But price growth is not expected due to the high current overstocking of the market.
- What are your forecasts for the timing of market recovery?
- After 2015, the market took a whole seven years to recover (the 2014 sales record was broken only in 2021). But during this period , many difficult reforms in housing construction were successively carried out, including transition to project financing. Now all the key mechanisms of project financing and mortgages have been debugged. All you need is stability. As soon as the fears of the population caused by the current situation begin to disappear, the market will recover very quickly.
- How will the fact that many solvent people left the country affect? This was not the case in 2015.
-Emigration is not significant enough to affect sales and new buildings . The demand for modern housing in Russia is huge .
– That is, in 2023 the industry is entering a state of uncertainty with a large number of unknowns and a number of potential risks that can behave as you like?
- I agree with the head of the Central Bank of the Russian Federation Elvir oh Nabiullina , who constantly frankly notes the complexity of planning in the current situation . It is difficult for everyone to plan : the government, the Central Bank and, of course, business. No one knows what will happen in six months or even in a month. Accordingly, for the housing construction market, where on average two years pass from the sale to the transfer of an apartment , and 5 years from the purchase of land to the return on investment, this is especially relevant .
- You specified that it is the banks that actually determine the scale of construction for the coming years. And until 2024, the volume of housing commissioning is clear. Assess the long term.
- The government does not cancel the goal of building 120 million square meters. m housing annually . It is clear that not only individual housing construction , but also multi-apartment housing should grow .
In accordance with the published plans, the volume of construction of MFBs should grow to approximately 80 million square meters. m annually from today's 50 million . The situation is excluded when, with such volumes of construction, sales will remain, for example, at the level of 40 million square meters. m . In order for the MKD market to reach the commissioning of 80 million square meters by 2030, m , the volume of new projects put into construction in 2027 should correspond to this figure. Accordingly, in 2026, the volume of sales of new buildings should also reach 80 million square meters. We need to add 10 million square meters in sales. m every year. Tough task.
It turns out that when the Central Bank and the Ministry of Finance talk about the abolition of preferential mortgages, they should honestly add : "And cancel the implementation of the goal of a large - scale increase in housing construction." There can be no simultaneous decrease in sales and growth in housing commissioning. So it doesn't work.
- Investments in real estate have finally ceased to be an interesting tool?
- According to statistics , in recent months in Russia, the money supply has been growing at an unprecedented rate. 3 each trillion rubles a month. People stopped spending money and switched to savings mode. If such rates continue, then in a year the population will accumulate potential investments of 36 trillion rubles.
This money will have to fall on the commodity market at some point . Sooner or later people will want to invest their accumulated funds . The question is: where exactly ? Cars, expensive overseas travel? No. Currency, gold, bitcoin, stocks? It is unlikely that these assets have lost confidence.
Of all the options for a reliable investment , only real estate remained.
In my opinion, accumulated citizens, the money supply will inevitably flood into the real estate sector in the foreseeable future . There's just nowhere else. By this point, the housing market cannot be undermined . He must be healthy and ready take this amount of investment to make up for this year's sales slump and move further towards the target of 120 million sq. m of housing commissioning annually.