Photo: Vladimir Baranov/Global Look Press
The drop in demand for residential real estate in the Russian Federation is breaking all records, in the whole country, almost half as many apartments and houses began to be bought on the secondary market. At the same time, the declared price level remains approximately at the same level, the drop is insignificant. Thus, the basic principle of the “liberal” economy is violated — the “invisible hand of the market”. That is, either the principle itself is completely false, or the real prices are still completely different.
According to the Avito Real Estate service, demand in the secondary real estate market in Chelyabinsk fell by 48%, Saratov — by 47%, Moscow — by 45%, Samara — by 41%, Sochi — 39%, and so on. As a whole, the country counted minus 33%, but this, as it is easy to guess, is inaccurate. However, the trend is obvious. What is the reason?
“In the secondary housing market in Supply and demand in Russia continue to decline, but prices are rising at the same time. There is a situation when for some real estate is a stable and price—adding asset, so apartment owners have a desire to hold them, while other potential buyers pay attention to new buildings where there are preferential mortgage programs with more convenient conditions than on the secondary market,” says the head of the secondary and suburban real estate department Avito Real Estateand ” Sergey Eremkin.
Nothing is clear, some kind of stream of consciousness… What kind of “asset” can there be if it has a completely fortune-telling value and is not for sale. In addition, the information about the price increase, how to put it mildly, is a little inaccurate.
“The secondary market will stagnate and prices will decrease. The cost of a meter on the secondary market is stomping on the spot — in January-February 2024, the price dynamics does not go beyond the statistical error.
The illusions that fed the owners of secondary apartments that the Central Bank, which sharply raised the key rate in the second half of 2023, would reduce it as quickly as in 2022 and 2015, are gradually dispelling.
Sellers get used to the new reality of the departed demand and begin to adjust to it. So closer to the May holidays, prices will creep down under the pressure of reduced demand and high rates,” says Oleg Repchenko, head of the IRN analytical center.
If you look at the situation from the point of view of macroeconomics, it will still be sadder. That very “invisible hand of the market” on the scale of processes of national importance — prices for fuels and lubricants, energy carriers, strategic raw materials, etc. — is really fake. Everything is controlled everywhere, whether it is the United States, the European Union, Russia or China. The authorities of any country never let such cases take their course, it is a matter of the country’s survival.
On the contrary, in purely domestic matters, this very principle of the balance of supply and demand works, there is often no regulation here. If too many coffee grinders, cars, or T-shirts are released, the market will become overstocked, and prices for these goods will inevitably fall. So it is in the real estate market — people have bought a lot of “investment” apartments, developers have built a lot of high-rise buildings, and all this is not for sale. The result is obvious.
“The activity of buyers in the secondary market from September — October 2023 decreased relative to the record levels in August due to a decrease in interest in mortgages — the increase in the Central Bank rate was expected to lead to an increase in mortgage rates to prohibitively high levels of 17-20%,” CIAN—Analytics notes.
Whatever the “regulation” is — stimulating demand in the primary market in the interests of developers. But it has already disappeared, the preferential mortgage has been de facto canceled. Banks are concerned about the current situation, because several million apartments in new buildings are idle in the country, which no one is able to buy – it is expensive. A collapse in prices can occur at any time, after which all the collateral housing that financiers have as collateral for mortgages will become worthless. Therefore, new loans for the purchase of real estate are not given.
Actually, the process has already begun, and the declared prices, which are discussed by the so-called “real estate market analysts”, have an extremely indirect relationship to reality. Of course, there are some deals going on – people need to solve their housing problems at any time — but the prices are completely different. They have decreased, although not yet in full accordance with the level of falling demand.
“I have several apartments that have been on sale since last summer. One went away not so long ago, but the discount was 25%. The buyer was the first and only one: since last summer, when the object was put up, there has not even been a single viewing. Of course, he wanted a bigger discount, but still agreed by mutual consent. What will happen next is unclear, every day a buyer with money becomes more and more rare,” says private realtor Tatyana Ivanova.
There is no mortgage at all, and household incomes continue to decline. That is, there is nothing to buy. That is why the price tags for square meters that are observed today are nothing more than virtual. No one can buy anything for that kind of money. And sellers are already drawing conclusions.
“Competition for a real buyer forces owners to both reduce the sale price and make a discount: the average level of bidding this month increased from 3% to 4.7%. At the same time, there are urgent sale options on the market,” said Ildar Khusainov, director of the Etagi real estate agency.
“Urgent sale options” is exactly what was given above as an example. And then, indeed, everything will only get worse. As the head of the IRN correctly noted, the “dead season” will begin on the market in May, and then extremely rare buyers will disappear altogether. Apartment owners understand this and are already ready to bargain well. It’s not too late yet and prices haven’t collapsed at all.
“Moscow markets and St. Petersburg is the most competitive, and therefore it is obvious that they are starting to react faster to the trends that are taking place. And the trends are simple. We have a very large number of overpriced ads today. These are not the prices of real transactions that show statistics, but the prices in ads.
The prices in the ads began to decline because it became more difficult to take out a mortgage due to an increase in the key rate, and inflation reduced the purchasing power of the population. Demand has fallen accordingly. As a result, sellers overestimated their apartments. Many put up apartments at inflated prices, which does not correspond to real demand,” explains Konstantin Barsukov, a member of the Russian Guild of Realtors.
English 
Russian 
German 
Polish