Prices for new apartments in Moscow collapsed to a minimum in 4 years

The Moscow real estate market is in no hurry to notice the economic recovery seen by Rosstat, the government and the Central Bank.
14.09.2017
Origin source
In August, after a pause of almost a year, prices in the capital's new buildings resumed. Compared to July, the square meter fell by 0.8%, and in annual terms - by 2.1%.

The average selling price fell to 191.8 thousand rubles per square meter. m. ($ 3217), which became the new minimum since 2013, that is, for the entire time of the crisis, according to MIEL-Novostroyki.

The market resumed decline even though the total supply volume stopped growing for the first time in 10 months, says Natalya Shatalina, the company's general director: by the end of August, 2.88 million sq. M. and 45.2 thousand lots. This is 0.3% less than a month ago.

However, she adds, the summer lull from developers was obviously temporary: in the autumn, the entry of objects is activated, and the canopy of the offer will return to the level of 3 million square meters by the end of the year. - characteristic of the last months.

The excess of apartments in Moscow is now a record for the entire time of observations: taking into account the rates with which objects are sold, it will take at least 1.5 years to realize all apartments in new buildings, analysts of the Central Research and Analysis Institute have estimated. And then, provided that new housing will not enter the market.

The two years of recession and the record-breaking collapse of the standard of living since the 1990s have coincided with the construction boom that began when oil prices were still high and the sanction war with the West did not dream of builders even in nightmares, explains the director of the secondary market INCOM-Real Estate Department Sergey Shloma.

Projects of construction, which were started even with oil more than $ 100 per barrel, spilled into the market in 2015-16.

Now, according to Shloma, the demand for apartments is minimal for 10 years: in August, the number of appeals to realtors fell by 11.4%, the amount of advances made - by another 8%, 87% of the objects in the secondary market go with a discount.

By 2020-21, the cost per square meter in the capital will drop by another 30-40%, says the head of the analytical center IRN Oleg Repchenko.

To correct the situation would help a radical reduction in construction - by 30-35% from the planned for the next few years, but this will not happen, he believes. "By the end of the year, we expect significant input of real estate - at least 7-7.5 million square meters," a representative of the Moscow construction complex told Vedomosti. In the region, for example, this year introduced 2.9 million square meters. m of housing, which is only 0.7% lower than the same period last year.

Demand for apartments in Moscow collapsed to a minimum over 10 years

The Moscow real estate market, heated up to the state of "bubble" in the years of oil super profits, continues to plunge into a harsh reality.

In August, the demand for apartments in the capital collapsed to a minimum for 10 years, reported on Thursday, Incom-Real Estate. The number of contractual obligations on concluding deals was reduced by an additional 12% compared to last year's level.

Traditionally, in August the market is emerging from the state of "summer hibernation", but this time the buyers did not return. On the contrary, the demand indicators turned out to be even worse than at the beginning of summer: the volume of advances paid fell by 8% in annual terms, the number of appeals to realtors fell by 11.4% compared to June.

The market actually arose due to a sharp contraction of solvent demand, says director of the secondary market INCOM-Real Estate Sergei Shloma: only 20-30% of sellers are willing to reduce the price in accordance with the possibilities of buyers, 7 out of 10 overestimate their apartments relative to the real situation.

"Owners of real estate are desperately resisting the downward trend in house prices: they do not understand: if everything around becomes more expensive, why should I sell my apartment cheaper?", Says Shloma.

But the reality is that 87% of the objects go with a discount, its average size in August is 8.7%.

The situation in the secondary market is aggravated by the supply of new buildings, which is growing "to all crises in spite of it," Shloma said.

The excess supply on the market is now a record for the entire time of observation: two years of recession and a record collapse since the 1990s of the standard of living "coincided" with the construction boom that began when oil prices were still high, and the sanction war with the West did not even dream of builders in nightmares.

Projects of construction, which were started even with oil more than $ 100 per barrel, spilled into the market in 2015-16, and the commissioning of housing soared twice.

Given the current pace of sales for the sale of all apartments in new buildings will need at least 1.5 years, analysts calculated CIAN. And then, provided that new housing will not enter the market.

The situation is exacerbated by the fact that those who bought them as an investment start to get rid of apartments - in comparison with 2014 the volume of such supply in the market soared by 120%, and the share in the total mass - almost twice, to 5.4%, was calculated in Incom-Negitude.

As a rule, "investors" in real estate are not professionals of the market: they bought apartments, thinking that this is a reliable investment that will pay off. But the crisis that started in 2014, as a result of which prices have fallen in dollar terms in dollar terms, forces them to flee.

So far, there are no factors that could lead the market out of the peak: those who are waiting for a recovery in demand in the fall, after the holiday season, are likely to be disappointed, Shlom predicts.

To correct the situation would help a radical reduction in construction - by 30-35% from the planned for the next few years, says the head of the analytical center IRN Oleg Repchenko. But this will not happen. "By the end of the year, we expect significant input of real estate - at least 7-7.5 million square meters," a representative of the Moscow construction complex told Vedomosti. In the region, for example, this year introduced 2.9 million square meters. m of housing, which is only 0.7% lower than the same period last year.

The final blow to the capital market will be the renovation program of five-story buildings, says Repchenko: a part of the residential area, as in the case of Luzhkov's settlement of the Khrushchev, will go on open sale. As a result, the market faces a full-scale price collapse in the next five years.

By 2020-21, the cost per square meter in the capital will drop by another 30-40%, the expert warns.