A month without a preferential mortgage: demand has fallen, prices are holding up

Experts from the “Floors” record in July a drop in demand for the purchase of apartments in new buildings (the number of applications) in Russia as a whole at the level of 30% by June. A similar situation, according to their data, is observed in the Moscow region. “But the main problem of the market now is a decrease in conversion and the speed of transactions. For some potential buyers, the current conditions of mortgage lending have become simply unacceptable,” said Ildar Khusainov, director of the federal company “Floors”. Many people do not fit into preferential programs, others do not have enough accumulated down payment due to increased requirements for it, the expert explained.

Moscow (Photo: Evgeny Biyatov / RIA Novosti)

According to the real estate company Zhilfond, in July the number of applications for the purchase of new buildings decreased by half by June, and by May — by three times. The decrease in interest in buying new buildings is noted by CIAN analysts, but not so sharp. “The number of views of ads for the sale of new buildings on the site in July is only 10% lower than in June. It is noteworthy that the indicator began to grow after the publication of the conditions for a new family mortgage (after July 10),” said the expert of CIAN.Analysts” Elena Lapshina. At the same time, according to the statistics of the EISWS, the volume of concessional lending (both in Moscow and in Russia as a whole) in July was about 70% less than in June. “In the first decade of the month, banks did not really issue a family mortgage, and in July, the issuance of an IT mortgage was suspended. If we make an adjustment for this, then the decline is slightly more than 50%,” the expert added.

At the same time, the active supply began to grow. According to CIAN, the number of lots on sale in new buildings in Moscow in early August is 5% more than in early July, and amounts to 61 thousand lots. “The increase in choice is explained by a decrease in demand — objects are no longer being sold and are accumulating on the market,” explained Elena Lapshina.

Developers note a drop in apartment sales

The drop in demand for new buildings is confirmed by the developers themselves. “At the end of July, consumer activity decreased by 50% compared to June. The updated conditions for issuing a family mortgage helped in part — of course, they became tougher, but at the beginning of the month such a mortgage was not issued at all,” said Rustam Azizov, Director of mortgage sales and implementation of financial instruments at A101 Group. In July, banks and developers promptly introduced programs to the market in which a low rate (up to 10%) is issued for the period of house construction. At the same time, according to the expert, market mortgage rates have increased to a prohibitive 22-23%, which reduces the opportunities for developers to subsidize. “Now the situation is such that subsidies can become even more expensive and the minimum thresholds can still grow, and buyers are not ready for rates above 13% either financially or psychologically,” Rustam Azizov said.

The decrease in demand in July is confirmed by the Federal Grid Company. Moreover, while sales in business class remained at the level of June, in comfort class they decreased by 20%. “As we expected, in July, we concluded additional deals in June against the background of the cancellation of state support. Further, we already see changes in August — business class retains demand, price increases are taking into account construction readiness, since it was initially less sensitive to government support limits,” said Ksenia Tsaplina, Director of the Department of Analytics and Product Marketing at FGC Group. “In the comfort class, we expect to see the washing out of small apartments and studios,” the representative of the developer added.

Prices stand still

Prices for new buildings have hardly changed in a month, although a downward trend appears — mainly through discounts and promotions. For example, the FSK Group of Companies said that they had revised the terms of installment programs. “We are trying to make them preferential at least for the construction period (two to three years from the current date for new facilities), with minimal payments or even deferred payments until commissioning,” explained Ksenia Tsaplina.

Photo: Eric Romanenko / TASS

In general, according to the “Floors”, the average price is 1 sq. m. m in new buildings increased by 0.4% in July, an annual increase of 10.7%. “There is a trend towards price reduction, while it is veiled by various kinds of individual discounts and subsidizing rates by developers at their own expense, and not by increasing the price of the object, as it often was before,” Ildar Khusainov said. According to him, developers with low margins are now in a difficult situation — they seem to be between a rock and an anvil. On the one hand, the market situation requires them to subsidize rates and increase the discount, on the other, the increased construction costs do not allow them to do this. “And this is already a dangerous situation for the construction industry,” the head of Floors believes.

According to the CIAN, in early August, the average price per square meter in new buildings in Moscow is 370.5 thousand rubles, which is 0.1% lower than in July. “After a local price increase in May-June (against the background of a peak in demand before the cancellation of preferential mortgages), they returned to stagnation in July. It’s too early to talk about price cuts. On average, in 16 million-plus cities and two metropolitan areas, a square meter has become 1.2% more expensive over the past 30 days,” said Victoria Kiryukhina.

There is no direct reduction in prices for housing under construction yet, only through individual discounts and promotions, added Alexander Chernokulsky, director of the Zhilfond company. In his opinion, a decrease in the cost of new buildings in the near future is unlikely, since the cost of money for developers is not decreasing. “Therefore, instead of sales, many will hold unsold apartments in order to find an opportunity to sell them on more interesting terms and not destroy their financial models,” the head of the Housing Fund believes.