In March 2020, the coronavirus pandemic began, and almost simultaneously the world oil market collapsed, followed by the stock markets and the ruble exchange rate. Countries are moving to a state of war. Do people need cities and even more apartments in them in the conditions of the apocalypse? How will the value of real estate change in the future?
At the end of 2019, the Russian housing market was promised stable development - a moderate rise in prices, a decrease in mortgage rates and a gradual increase in demand for apartments. January and half of February passed under the sign of almost absolute calm, and then life changed - in just a couple of weeks. On February 27, the World Health Organization (WHO) announced that the situation with the spread of the SARS-CoV-2 coronavirus could get out of control. And so it happened - on March 11, the coronavirus outbreak was officially recognized as a pandemic. The world oil market collapsed almost simultaneously, followed by the stock markets, the ruble exchange rate and the shares of the largest Russian companies. Countries, including Russia, began to close their borders and, in general, go over to a state of war. A number of major European capitals seem to reproduce scenes from films about the end of the world. The future of the Russian housing market is in the material of Lenta.ru.
Everything is new
At first glance, Russian developers are even glad of the sudden onset of the crisis: any shock is a reason to sell unshakable square meters at a higher price. “In the short term, amid news of a falling ruble and an increase in mortgage rates, we expect an increase in demand for apartments,” confirms Olga Tumaykina, Commercial Director of FGC developer. - Indeed, in the conditions of instability for our citizens, investment in real estate is traditionally considered the most reliable investment. In the wake of increased demand, prices will rise as well.
According to the expert's forecasts, in the coming months the cost of housing in new buildings may increase by 5-7 percent.
VSN Realty CEO Yana Glazunova also points out that some developers will want to take advantage of the temporary surge in demand associated with the fall of the ruble and raise prices. This, in turn, will entail a decrease in the number of transactions, so construction companies must be careful not to let potential buyers out of the market. “A noticeable increase in cost - by 15–20 percent - is possible only for new projects if the rates of project financing change. But this is a long-term forecast, at least six months in advance, ”says Glazunova.
The apartments have attracted buyers. Developers were able to raise prices
“Developers have already prepared a new price list with a price increase in the range of up to 10 percent, but so far they are not implementing it, but are monitoring demand, mortgage rates, macroeconomic indicators,” says Valery Kochetkov, Deputy Director of the Department of New Buildings, INCOM Real Estate. - Not much time has passed yet to make forecasts until the end of the year, since this requires at least an approximate understanding of the duration of the crisis, it will appear in a week or two. If the ruble begins to strengthen, then the crisis will turn out to be short-lived, and the market will not feel serious fluctuations. But if the crisis drags on, then, of course, everything will be much more complicated. "
Vasily Fetisov, the commercial director of the Moscow office of the Etalon group, is also sure that the jump in demand for apartments will be short-lived. Further prospects for the housing segment for the mass consumer are vague: “If the negative trend continues, the Central Bank may raise the key rate. This, in turn, will make mortgages less affordable. This will reduce the effectiveness of the main support tool for new buildings in the mass segment and in the lower price fractions of the business class, where the share of credit housing reaches 40-60 percent, ”the expert explains.
Sergei Nyukhalov, Deputy Director for Sales of the Granel Group, is also restrained in his forecasts: apartment prices, according to him, will continue to grow due to an increase in the share of projects using project financing, but a possible increase in mortgage rates for the new construction market will become “real test ".
The expert assumes that the demand for housing will fall, and the peak of the fall will be in the summer of 2020. The good news is, again, a short spike in demand in the near future.
“Now we can say that the fall of the ruble and the fluctuation of the currency will push to a faster decision-making of those clients who considered buying an apartment this year, but did not dare,” says Nyukhalov.
According to the expectations of NDV-Supermarket Real Estate analysts, the cost per square meter of housing under construction may grow by an average of 5-7 percent by summer, and by the end of the year - by 10-15 percent. “Until the end of the year, developers will have to reconsider pricing in their projects,” agrees Andrey Kolochinsky, Managing Partner of VectorStroyFinance. - The rise in prices will be due to an increase in the cost of construction. He calls the scale of growth the same - no more than 10-15 percent by the end of 2020. "
The low paying capacity of the population, coupled with the possible growth of mortgage rates, will not allow developers to raise prices higher, ”the expert points out.
In the meantime, developers are having a holiday, slightly overshadowed by the lack of a strategy of behavior in the current difficult conditions. “We show objects until late at night, and construction companies, according to our information, are recording a flurry of calls. In this regard, the builders are holding emergency meetings about what to do next, ”says Boris Boriskin, General Director of Skolkovo Realty.
Analysts, in turn, confirm that the excitement in the market for new buildings will not last long: according to Alexei Popov, head of the analytical center at CIAN, developers faced a decrease in demand even before the pandemic and the fall of the ruble.
The reason is the rise in prices, outstripping the growth of incomes of the population. The interest of citizens in buying apartments should have been supported by a further decrease in mortgage rates, which is now out of the question.
New buildings, secondary housing and mortgages. How the decline in the ruble will affect the cost of housing
“In the current situation, developers will not have great opportunities in terms of price increases, especially since a significant part of effective demand was realized in mid-2019,” says Natalia Kuznetsova, General Director of the Bon Ton agency. “Not only have the real incomes of the population not been growing in the past few years, but now the prices for imported products and fuel and lubricants will also rise, which means that everything will gradually rise in price. People will not have time to buy apartments or mortgages. It will be good if unemployment does not grow critically. Under these conditions, developers will not be able to raise prices, and the most agile will try to sell apartments at a discount as soon as possible, ”echoes Pavel Lutsenko, head of the federal portal World of Apartments.
The analytical center "Indicators of the real estate market" gently points out to businesses that raising prices at the present time is "not a very wise strategy." The excitement in the housing market will inevitably be replaced by stagnation, analysts warn, “and perhaps much worse than stagnation, because in addition to the collapse of oil prices and the ruble exchange rate, the economy can be knocked down by another“ swan ”that no one expected in the market. - the coronavirus epidemic ".
Personal versus general
The secondary market, meanwhile, lives a separate life, and the behavior of its participants is largely determined by personal circumstances - it has been and will probably always be so. “Some sellers are raising prices against the backdrop of a falling ruble, almost unsuccessfully trying to win back losses from a jump in the exchange rate - the chances of closing a deal at prices above the market are slim,” says Aleksey Popov. "And other sellers - those who, due to life circumstances, need to make a sale without fail - on the contrary, are ready for significant discounts."
According to Avito Real Estate, after the dollar strengthened in 2014, the average price per square meter in the secondary market in Russia decreased by almost 6 percent in six months, and the market managed to win back the decline and return to previous levels only by the fall of 2019.
At the moment, the average price per square meter of the Russian "secondary housing" is 54 thousand rubles, over the past year it has grown by 5 percent.
There is no information on dynamics for the last weeks yet.
“Regarding the coronavirus epidemic, we can say that it did not have any noticeable effect on the real estate market in the capital, including on the order of inspection of apartments and the conclusion of transactions,” says Sergei Shloma, director of the department of the secondary market of INKOM-Real Estate. “Moreover, the events associated with Russia's withdrawal from OPEC + and the depreciation of the ruble completely overshadowed the news about coronavirus for market players.” The expert points out that with the weakening of the ruble, the behavior of potential buyers of "secondary housing" changes in a standard way: consumers, fearing the depreciation of their savings, begin to massively buy apartments, which leads to a short surge in demand in the real estate market - no more than a month or two.
The amount of unnecessary housing in Moscow has been calculated
“And then, in a natural way, demand collapses and the market slows down, sometimes for quite a long time - for several months, and sometimes for the whole year,” Shloma recalls. - At the same time, we do not see any significant changes in the secondary segment related to the level of prices or demand. According to our observations, only 1-2 percent of sellers are now asking realtors to postpone a previously planned deal in order to observe further developments. " The cost of secondary real estate, according to the expert, cannot grow strongly at low oil prices, but the cost of the "secondary" property will not decrease in the foreseeable future.
Elena Mishchenko, head of the city real estate department at NDV, highlights another interesting phenomenon in the "secondary housing" - in Moscow, in particular, there are buyers who, in principle, do not consider offers near infectious diseases hospitals, morgues, crematoria, tuberculosis dispensaries and cancer centers. In general, says Mishchenko, in the capital