The Central Bank announced the difference in prices for new buildings and secondary housing at 55-60%

The price difference between secondary and primary housing in Russia averages 55%, but there are regions where this gap exceeds 60%, the Central Bank noted

The difference between prices in the primary and secondary housing markets is not reduced due to the outstripping growth in prices for new buildings. In some regions, for example in the Moscow region, this difference exceeds 60%, Director of the Financial Stability Department of the Bank of Russia Elizaveta Danilova said at the conference of the Association of Banks of Russia (ADB).

The price gap between secondary and primary housing is a sign of an imbalance that has begun to grow against the background of preferential mortgages, Elizaveta Danilova noted. “Let me remind you that before the launch of mass mortgage programs, our gap was less than 10%. Rosstat data as of April 1 shows 55%, Domclick data – 45%. Perhaps such a significant increase in Rosstat is partly due to a change in the sample. Nevertheless, Domclick is also showing growth,” said a representative of the Central Bank.

“So far, we do not see that this gap is closing. This is expected, because now there are mainly mortgages for new buildings, where there are preferential programs. Indeed, prices continue to rise faster in this market,” the representative of the Bank of Russia noted.

According to her, housing under construction can objectively cost more due to higher quality. “But still 45-55% is a big difference,” said Elizaveta Danilov. At the same time, in some regions, for example in the Moscow region, the price gap between secondary and primary housing exceeds 60%. “This objectively carries risks. Because if a person has bought an apartment, he cannot sell it on the secondary market,” she explained.

By the end of 2023, the price gap between housing under construction and ready-made housing was 44%. At the beginning of last year, the indicator was at the level of 30%. This year, the price difference continued to increase and reached 55%. From the Central Bank’s perspective, this creates increased risks for mortgage borrowers.

Last autumn, the head of the Bank of Russia, Elvira Nabiullina, speaking in the State Duma, announced a “screaming imbalance” in prices for secondary and new buildings. “Of course, we cannot but be concerned that this growth is accompanied by an increase in housing prices and a decrease in the quality of loans due to the issuance of mortgages to borrowers with an already high debt burden. In the future, this may result in great risks for banks and, most importantly, for borrowers themselves,” Elvira Nabiullina pointed out.

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