The real estate market survived the panic and sees no future

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The real estate market survived the panic and  sees no future
The real estate market survived the panic and sees no future
11 April, 10:59Economy
The real estate market in March has undergone significant changes. With the rise of the key rate of the Central Bank from 9.5% to 20%, mortgage prices have risen significantly.

At the same time, there were a lot more rental offers. The demand for the purchase of housing again reached the peak - the Russians conservatively invested in square meters in order to save savings.

Julia Suntsova

What are the forecasts for the real estate market for the near future? How have sanctions against Russia affected the construction market? "NI" talked about this with the experts.

MORTGAGE

After raising the key rate of the Central Bank to 20%, mortgages became less accessible - for a huge proportion of potential users, housing loans with a "bank markup" of a quarter percent became unavailable. Clients who focus on buying a home on credit are the least financially stable people. In some cases, banks sent notices to customers about rate increases, after which they unilaterally terminated or rewrote already pre-approved mortgage agreements. A minority of mortgage lenders go all the way and accept increased interest rates. Housewarming postponed.

Of course, there are buyers with a technical mortgage and with a 100th payment immediately extinguished, namely: this is now observed in the high-budget segments of the primary market (business class new buildings and above). The share of such transactions can really increase greatly, but this is a tiny fraction of the total number of mortgage transactions.

- Although the growth of the mortgage rate was expected, it still became psychologically difficult for buyers. Many mortgage buyers have abandoned deals. The share of mortgages in the total volume of transactions is decreasing. Most likely, by the end of 2022, it will be about 50%, in previous years it reached 85%.

- Today's decision of the Central Bank of the Russian Federation to reduce the key rate to 17% will help reduce mortgage rates from banks by 3 percentage points and allow consumers to take loans for longer periods - from 15 years. Preservation of some kind of preferential mortgage, even with new conditions, namely, an increased rate from 7 to 12% and a maximum loan size of 12 million rubles in Moscow and St. Petersburg will somehow support demand in the primary market.

Developers can still offer clients their own loan co-subsidization programs - an additional discount from the developer comes up to 4% of the mortgage rate for the first two years or 1.4% for the entire period, says Sergey Shiferson, managing partner of Touch development company.

PURCHASE-SALE

With transactions of purchase and sale is still tight. Many Russians, wanting to save their savings from depreciation, rushed to buy apartments. The market reacted instantly - the already high real estate prices grew even more.

- Realized demand in the Moscow region increased by 20% (in the number of lots sold compared to February 2022). At the same time, the average area of a sold apartment decreased from 38.4 to 37.5 square meters. This suggests that people were in a hurry to save their savings in a conservative way - by shifting to real estate.

The share of studios and one-room apartments in the structure of sales increased - the purpose of these transactions was not to improve living conditions, but to save money: investors were in a hurry to enter the market with minimal budgets. Also, in the structure of sales, for example, of our projects near Moscow, the share of transactions with the maximum initial payment increased. This shows that they gave everything that was left to these transactions in order to minimize the amount of credit funds, - says Victoria Kovalevskaya, head of the marketing research department at Glavstroy Regions.

However, those wishing to part with housing are much less willing to purchase it. No one is in a hurry to exchange a valuable asset for rubles. Every week, the number of those who change their minds about selling housing becomes 8-10% more, such statistics are provided by CYAN. Trades are canceled and suspended even at the final stages. The result - explosive demand, limited supply. At best, the sellers are trying in every possible way to play for time or agree to a deal, subject to settlement in dollars.

- The first quarter of 2022 turned out to be a record one in terms of the number of transactions in the primary market, including those made using mortgages. As demand rose, so did prices. However, the situation has changed dramatically since the beginning of March under the influence of the geopolitical situation. Everyone tried to quickly implement the previously issued mortgage approvals on the same, “pre-sanction conditions”. At the moment, the issuance of mortgages has decreased significantly, and this trend will continue, in my opinion, until the end of 2022, unless, of course, the refinancing rate of the Central Bank of the Russian Federation is significantly changed. If until now 2/3 of transactions were made using mortgages, then while maintaining the current refinancing rate, I think the maximum that we will see is 1/3, and then mainly in Moscow, St. Petersburg and the Krasnodar Territory, - the head of the Meshchansky municipal district notes Moscow Alexander Zakuskin.

- Today we again see a rush demand for real estate. This has led to an increase in prices. So far, we are still seeing a trend towards an increase in the number of transactions, as many are rushing to close deals that have approved loans at the old rates. Plus, there is the n-th number of buyers who managed to sell their apartments, but have not yet invested the proceeds. So far, demand is stable, but a decline is expected. Current rates for state programs have already increased two or more times. In the secondary housing market, mortgages have actually become a non-working tool due to rates above 20% per annum. Until 02/24/22, there were rates at 0.65% per annum, I conducted such transactions with top banks. Now about such a percentage can only be nostalgic. According to polls by Central Bank analysts, inflation in 2022 will be 20%. In my opinion, real inflation will be higher. Money has already become more expensive, and this is not the limit. In such circumstances, people will be afraid to take out a mortgage for fear of not paying it off. There will be fewer buyers, says Yana Kuzovleva, lawyer, co-author of the telegram channel Lawyers Pro Real Estate.

RENT

The shift of buyers is in the direction of temporary lease. Those who could not buy their own housing due to a jump in prices and an increase in the cost of mortgages are considering renting an apartment as a temporary option.

The outflow of some Russians from large cities abroad for a period of uncertainty contributed to an increase in the number of rental announcements. Someone leaves impulsively and is ready to give away their housing for a period of absence for a low price in order to at least cover utility costs.

A special surge in supply is observed in large cities. Before the February events in Moscow and St. Petersburg, there were approximately 400-500 new ads per week, now this figure has doubled. The most noticeable dynamics was noticed among the running apartments - odnushki and studios. The number of advertisements for their lease increased to 33% and 44%, respectively.

At the same time, apartments are entering the rental market, which were also bought for the sake of saving money in the rush coronavirus years 2020-2021.

Despite the increase in rental supply, there were no more deals. The owners tie the rates to the exchange rate and raise the payment. The average cost of renting a one-room apartment in Moscow is 52 thousand rubles, in St. Petersburg - 35 thousand rubles, realtors say.

Real estate experts predict an even greater release of rental housing in large cities, in Russia - an average of 20%. Including a factor in increasing the supply of rentals may be an increase in unemployment, the closure and downtime of enterprises. Visiting employees will return home to the regions and vacate the occupied space, not being able to cover rent payments. Foreigners are also leaving. In the worst case scenario, owners in cities will also rent vacant rooms in their own apartments for the purpose of additional income.

While the owners are waiting for wealthy tenants for their housing, but there are not enough of them for all, they will have to rent it to at least someone. The outflow of tenants will eventually give a lull and a drop in rental housing prices.

CONSTRUCTION INDUSTRY UNDER WORLD SANCTIONS - PROBLEMS AND TASKS

Construction companies predict a rise in housing prices in the future by about 30%. The cost per square meter is increasing due to rising prices for building materials, supply difficulties, labor outflow - teams from the CIS countries have lost 30-40% in wages due to changes in the exchange rate. According to the results of February, the cost of building materials and equipment in Russia increased by an average of 50%, the cost of construction - by 30%, and the prices of consumables rose by up to 120%.

"The final prices for housing cannot but grow, taking into account the growth in the cost of construction. Developers will not sell square meters at a loss, even if demand declines. Some developers are suspending the launch of new projects, which means that in the future there may be a shortage of supply on the market, which will also not lead to lower prices", - says Vladimir Shchekin, co-owner of the Rodina Construction Group.

When a significant drop in household income and a decrease in purchasing power are added to all the negative factors of developers, builders will have a choice - to reduce prices or worsen the quality of new housing. Something suggests that the latter is more likely, experts say.

In addition, the pace of construction may slow down - developers need to look for a replacement for foreign materials. To do this, you need to establish your own production and / or look for the missing goods in friendly countries. What reciprocal steps of the Government could help here? For example, simplification of procedures for passing an examination when replacing materials and a moratorium on penalties under equity participation agreements. This will give market participants a good margin of time to select analogues, experts say.

"Now many developers have frozen their projects that are in the early stages of implementation. Of course, in terms of projects, there will be an upward shift in terms of time due to a revision of finishing materials and engineering communications, due to a delay in delivery due to the fact that imported materials and equipment were originally designed. Developers have already begun to offer their own mortgage products, I think we will soon see other products with which developers will try to attract customers and maintain prices", - says Alexander Zakuskin, head of the Meshchansky municipal district of Moscow.

Thus, earlier, during the construction of a residential complex, the cost per square meter averaged about 60 thousand rubles per meter, and now it is 80 thousand. In the comfort class, the cost of a meter has increased from 80,000 to 100,000 rubles.

The business class sector as a whole is waiting for the most dramatic changes. For such objects, imported air conditioning systems, engineering systems, plumbing, elevators, electronics, small architectural forms and other expensive elements were used to a greater extent.

- The instability of the macroeconomic situation, the devaluation of the ruble and other factors only push the cost of the "square" up. At the moment, prices for building materials have already increased by 15-20%. Developers are now adapting, revising financial models, import substitution of what can be imported, building new supply chains in terms of production and supply of building materials and equipment. The restructuring will take 3-4 months, says Sergey Shiferson.

- Developers are most actively looking for analogues of imported building materials in China. However, it is not so easy to arrange new deliveries, besides, it is still necessary to purchase these technologies and materials anywhere in the world for dollars and euros, which have risen in price greatly. In the future, the load on the supply chains from China, due to its almost monopoly position as a supplier to Russia, may increase significantly, which will cause supply disruptions. Russian manufacturers of building materials are also dependent on imports from Europe, so it will not be so easy to increase production quickly, - adds Vladimir Shchekin.

But the main difficulty for builders and developers now is the inability to make short-term and long-term forecasts and write any solid financial models of construction projects, especially those that are built taking into account the attraction of project financing, experts say.

BY THE WAY

In an interview with Novye Izvestia, the famous architect and honorary builder of Moscow Alexei Krotov named one of the most significant problems of construction:

"The technical equipment of the capital's construction complex is 90% dependent on imported components. Moscow construction sites use JCB (Great Britain) or Terex (USA) loaders, Hitachi excavators (Japan), Hyundai (South Korea), Putzmeister AG (Germany), Atlas Copco (Sweden) concrete pumps ) and Sifa (Italy), Liebherr tower and special cranes (Germany), Potain SAS (France), Jaso (Spain), Wermeer horizontal drilling machines (USA). "Their on the board" mining shields are incapable without constant maintenance and original consumables from Herrenknecht AG (Germany). At the reinforced concrete factories of the same PIK, Progress machines, Ebawe, Vollert, Elematic lines ...

All this imported equipment, no matter how high-precision and reliable it may be, tends to wear out, require repair and timely replacement. And what to change? Foreign equipment leaves the Russian Federation, maintenance and spare parts - that's it.

There is no import substitution - they simply did not do it, hoping for the West and having successfully destroyed their factories for the production of road machines and construction equipment.

Thus, the government's desire to intensify housing construction through preferential mortgages and various preferences for developers and apartment buyers may in the near future run into a banal lack of construction equipment. But today no one will build anything with the help of a pick, a shovel and a wheelbarrow!

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