Against the backdrop of a gradual recovery in the activity of developers and a sharp decline in demand from buyers, the average cost of primary real estate in the largest cities decreased slightly over the month. But the trend so far is associated more with a changing supply structure than with a real price correction on the part of developers, analysts warn. The latter are still trying to attract buyers by subsidizing mortgage rates, but many Russians are not yet ready to invest in real estate during the crisis due to concerns about its future liquidity.
The average cost of new buildings in the 16 largest cities of Russia in May amounted to 135.5 thousand rubles. per sq. m, having decreased over the month by 0.1%. Such data are provided by Cyan.Analytics experts, noting that so far the dynamics are more likely due to changes in the supply structure in individual locations. The company “Etazhi” also noticed a slight decrease in the average for the country as a whole – by 0.7% per month, to 100.4 thousand rubles. per sq. m. Although Avito Real Estate for the same period, on the contrary, noted an increase of 3% compared to mid-April, the average value for million-plus cities, up to 134.2 thousand rubles. per sq. m.
The most pronounced decrease in the average cost of new buildings per month, according to Cyan.Analytics, occurred in Chelyabinsk, where the indicator decreased by 7.5%, to 88.6 thousand rubles. per sq. m. In “Avito Real Estate” noted a reduction of 3% per month in Volgograd, up to 86 thousand rubles. per sq. m. And in the “Floors” noticed a pronounced price reduction in New Urengoy – by 2.6% per month, up to 132.9 thousand rubles. per sq. m. Although Ufa over the same period, new buildings rose in price by an average of 4%, to 118.2 thousand rubles. per sq. m, according to data from Cyan.Analytics. The same trend can be seen in Kazan – the indicator increased by 2.8%, to 170 thousand rubles. per sq. m.
AT Moscow, according to Cyan.Analitiki, primary real estate now costs an average of 322.1 thousand rubles. per sq. m. Over the month, this value increased by 2%, and relative to the same period last year – by 26.3%. AT St. Petersburg the average in the primary market is 235.8 thousand rubles. per sq. m. This is 0.3% less than in April, but 38.1% higher than in May last year. A slight decrease in the average cost of new buildings in the city occurred for the first time in 17 months, analysts say.
Alexey Popov, the head of Cyan.Analitiki, calls the activation of developers after a two-month pause dictated by general uncertainty the main factor in reducing prices.
Against this background, the volume of supply of new buildings in the largest cities increased by 8% per month, he notes. Avito Nedvizhimost noted an increase in exposure by 19% per month and by 65% per year. At the same time, demand in the market is falling: in Moscow, in April, a two-fold decrease in the number of transactions with primary real estate was recorded, in St. Petersburg – by 12%, says Alexei Popov. In the largest regional centers, the activity of buyers in April decreased by an average of 55%. The most pronounced in Voronezh and Kazan – by 70%, the least in Krasnodar – by 30%.
The head of the primary direction of Avito Real Estate, Dmitry Alekseev, states that, based on user requests, the demand for the purchase of new buildings in the largest cities of Russia is now 33% less than the previous month and 48% behind the value for the same period last year. Mortgage rates remain prohibitive for many potential buyers, he says. “The instability of the market situation and the expectation of more “understandable” rates creates pent-up demand for new buildings, but so far people feel uncertainty and doubt how liquid the acquired property will be in the future,” says Mr. Alekseev.
It is the decreased activity of buyers, according to the head of the center of new buildings of the company “Etazhi” Sergey Zaitsev, that has refracted the upward trend in prices for new buildings. According to the expert, the developers managed to partially neutralize the negative effect due to their own programs for subsidizing interest rates on loans, which companies launched en masse to support sales. But in general, in terms of demand, the market for new buildings, according to Mr. Zaitsev, is now comparable to 2018.
In the coming months, against this background, the dynamics of prices for new buildings, according to Alexei Popov’s forecasts, will be near zero: developers are not ready to clearly reduce the cost, but the launch of new buildings “with accurate pricing” on the market will smooth out the overall dynamics.
At the same time, Sergei Zaitsev does not rule out that buyers will face a shortage of liquid supply at high stages of construction. “This could lead to another price spike in the long term, as a period of low demand will be followed by another wave of high buying activity,” he argues.