New sales schemes for new buildings: how to sell housing without a preferential mortgage

Promotions for all buyers

“In general, about 80% of developers have proposed various schemes to maintain sales in the Moscow region market. These are mostly large developers. The most common program is installments, which are offered by about 70% of developers,” says Ilya Vitkovsky, Vice President of Sales and Marketing at DOGMA IC. “It has worked for many before, but with the restrictions it has received a new impetus.”

Founder of the Best-New Building company and the platform bnMAP.pro Irina Dobrokhotova estimates the share of installments in new buildings in Moscow at 60%. “However, at high stages of construction readiness, there is no point in installments, since it is given before permission for commissioning,” the expert recalls. According to Dobrokhotova, there is also an increase in schemes with a letter of credit, about ten more developers provide such an option as a tranche mortgage. “Basically, subsidizing from the developer is the most popular way to reduce the payment,” the expert concludes.

“Since July 1, about 20% of large developers have offered tranche mortgage programs to clients,” Ilya Vitkovsky shares his assessment. “It is implemented mainly with leading banks.” Borrowers use this program because it allows them to reduce the payment in the first months of the mortgage, the expert explains. Subsequently, with a decrease in key and stabilization of market rates, such borrowers expect to be over—credited.

The head of “CYANOGEN.Analysts” Alexey Popov draws attention to the fact that the vast majority of developers have certain sales schemes that stimulate demand in conditions of prohibitively high mortgage rates. But a more accurate assessment is complicated by the fact that not all developers report on their websites about the entire range of special offers. “Some of the schemes can be voiced in sales offices during substantive communication with the buyer,” he explains. — This was done due to the ambiguous verbal interventions of the Central Bank, whose representatives announced their intention to fight non-standard mortgage schemes. At the same time, it is still unclear to what extent this signal is the “last warning”, therefore, the nature of informing the audience about such opportunities differs from company to company.”

The Central Bank’s attitude to gray schemes

Various schemes for the sale of new buildings have long been of concern to the Central Bank. At the end of July, the head of the Central Bank, Elvira Nabiullina, stated that the regulator would fight various schemes that flourished in the housing market against the background of the completion of the preferential mortgage program with state support. “Before the completion of the broad preferential program, these schemes flourished again with renewed vigor. What is not there: installments, so-called cashback, and very preferential rates. But behind all these lures there is either an overestimation of the price of the apartment, or a sharp increase in payments subsequently. And all this is opaque and confusing for people,” Elvira Nabiullina said.

Trade-in

Trade-in is also presented among the special offers, adds Dmitry Efimov from PIONEER. The expert also names rent-to-buy as single offers. Irina Dobrokhotova also mentions programs involving co-borrowers, including from among the privileged categories. “So far, they are found with a minimum number of developers. The scheme is not very popular, because, for example, with a family mortgage, this co—borrower loses the right to independently use the family mortgage until this loan is closed or another child is born,” she explains.

Promotions for a limited number of customers

CIAN notes that 26% of the shares are addressed to only a part of the buyers. More than half of them are associated with additional conditions for family and IT programs (the latter does not work in Moscow and St. Petersburg, but is available in the Moscow region and the Leningrad region). “This is a reduced rate or a low down payment, and in some cases its absence,” analysts say. — Developers additionally subsidize mortgage rates, reducing them from 6% to 3-4% (sometimes lower) for the entire loan term or for the first year.”

Photo: Maxim Shipenkov / EPA / TASS

Other targeted support options include discounts for employees of certain professions (military personnel, including members of the military, teachers, medical workers, etc.), as well as discounts and special mortgage conditions for large families and those who use maternity capital. There are also support measures for residents of other regions, buyers from affected regions or those who have a residence permit in a certain location, for repeat buyers or for those who came on a recommendation. “In addition, there are promotions for newlyweds, salary clients and employees of certain banks,” the CIAN adds.

Preferential mortgages remain the main driver of demand

In general, the company’s experts conclude, against the background of changes in mortgage programs in Moscow, the volume of new products from developers has sharply decreased, while the volume of active supply, on the contrary, has increased — both due to lower sales and due to the withdrawal of stocks in buildings under construction.

The main tool for maintaining sales remains the family program, the surveyed market participants agree. “Mortgage lending in conditions of tight PREP will be supported by an updated family mortgage program,” said Kirill Tsarev, First Deputy Chairman of the Board of Sberbank. “The main driver of sales in the mass housing segment has been and will remain a family mortgage. Now our main task is to calculate different economic models in order to make mortgage payments available to customers for whom a family mortgage turned out to be unavailable,” says Ilya Vitkovsky.