Director of the federal company "Etazhi" Ildar Khusainov told Snob at the "Dvizhenie" forum about how the housing market has changed over the past four years, what dangers await in the primary and secondary markets, and what awaits buyers in the near future.
How would you assess the current real estate market and how has it changed over the past four years?
The current real estate market is a market of expectations and illusions. Sellers are holding prices, buyers are holding money. In the primary market, demand is stagnating after the latest changes in family mortgages. In July, new restrictions are expected, which could cause new builds to lose another 10% of demand. Meanwhile, the secondary housing market is becoming more active, mainly due to more affordable square meter prices, discounts, and expectations of further mortgage rate cuts with the possibility of refinancing expensive loans.
Over the past four years, the market has gone through quite an interesting journey: from very cheap mortgages and frantic demand, a large share of investment transactions, the emergence of a whole layer of new and modernized alternative housing purchase options, record construction volumes, to a gradual wave-like cooling of demand and more cautious positions by developers in launching new projects. The average price per square meter in the primary housing market in Russia has risen by 39% to 161,500 rubles, while for existing homes it has increased by 23.3% to 132,500 rubles.
And to be honest, the current price per square meter does not reflect the current balance of supply and demand in the market.
Has it become significantly more difficult for Russians to purchase real estate without a mortgage? Especially given current rates?
It depends on what you compare it to. Of course, in 2020, when there was a mass government-backed mortgage program for new builds and record-low rates on the secondary market, buying an apartment with borrowed funds was more affordable. Now, government-backed mortgages are no longer available, family mortgages continue to be restricted, and market rates, although declining, remain prohibitive. Market mortgages are taken either for small amounts, for a limited term, or with the prospect of future refinancing.
This is a golden time for cash buyers; for them, developers usually offer special conditions on the primary market and good discounts when purchasing an apartment. However, from July 1, further changes are expected in family mortgages, including the introduction of differentiated rates, which will further reduce its accessibility for some buyers.
Has the main demand shifted to secondary real estate? How has the price changed over the past four years and over the past year?
Demand has fallen everywhere, although the secondary market has seen some revival in recent months. On the primary market, the decline is masked by installment plans, tranche mortgages, and other demand-stimulating tools. On the secondary market, everything is exposed.
Real transaction prices for existing homes have fallen by 10–15% because buyers have become more selective and are looking for below-market options or good discounts, but many owners are still listing prices from previous years. Such properties are not in high demand now.
Speaking of the average price per square meter, in million-plus cities it has increased by about 6% year-on-year on the secondary market.
Did the story with Larisa Dolina's apartment change people's behavior?
The Dolina effect was felt until the court put an end to the case, after which the market gradually began to reduce the level of anxiety. Nevertheless, it became a catalyst, and a "safety cult" has formed in the market—buyers have become more attentive to transaction security guarantees, and now they are interested not only in the apartment's history but also in its owner's history.
Are there more problematic properties on the secondary market? If so, what kind? Do owners often hide flaws until the last moment, and do they affect the price?
There are plenty of problems. We regularly identify problematic properties and prevent them from being sold. They can be technical—when an apartment is bought and given a flashy but essentially cosmetic renovation—or legal.
One common problem is apartments previously purchased with a mortgage using maternity capital where shares were not allocated to children, or apartments with illegal renovations that cannot be legalized.
There is little point in hiding an apartment's problems; they will still be identified during the transaction preparation process, and in that case, they will complicate the deal, meaning the buyer may demand a significant price reduction.
How can a person check a desired apartment to ensure their safety?
To fully protect yourself, you need to check not only the apartment and its history but also all participants in the upcoming transaction. At a basic level, you must require a current extract from the Unified State Register of Real Estate (EGRN) and a full set of title documents, the spouse's consent to the transaction, certificates of no debt, and registered persons.
You need to make sure there are no illegal renovations in the apartment and check whether maternity capital funds were used in its purchase. In light of the Dolina case, we have also lowered the age threshold for a certificate from a psychoneurological dispensary.
What about the primary market? In Moscow, for example, a huge amount of housing is being built—is it being bought? And how is the final price for the buyer formed?
It is important to distinguish between the visible picture and the real state of affairs. What we see in advertising and what happens in sales offices are two different universes. New builds are being bought, but not at all like before. The market is literally held up by two "crutches." The first is the remnants of subsidized programs, primarily "Family Mortgage." The second is complex financial schemes from developers themselves. In the second case, the market lives on debt, hoping that by the time the keys are handed over, rates will fall and prices will rise.
The price is formed not only based on cost and market realities but also on obligations to banks. Let me explain simply: banks provide money for construction under project financing. Therefore, apartments in this project are essentially collateral. If a developer now openly reduces the price per meter by, say, 15–20%, there is a risk that the bank will recalculate the entire financial model.
The final price for the buyer is formed not in the equity participation agreement but in the aggregate of hidden concessions. When developers do not reduce the sale price but offer many different bonus options for the buyer. The price is not lowered directly, but through these bonuses, the buyer gets the apartment cheaper.
What should you definitely pay attention to when buying a home on the primary market? How not to overpay the developer and get a quality apartment?
You need to look at the financial model of purchasing the apartment to understand its final cost, taking into account various commissions, markups, and overpayments. Start by assessing the competitive offerings on both the secondary and primary markets. In particular, consider all possible purchase options: installment, cash, mortgage.
Then choose the most comfortable and least risky method for yourself. Plus, assess the reliability of the developer and the quality of construction, pay attention to compliance with deadlines on other projects, and buyer reviews. There are many marketing options for installment plans and subsidized mortgage rates on the market now, but they should always be evaluated critically, looking at the final price and comparing it with analogs and other purchase instruments.
What can be expected from the real estate market in the coming year? How will prices behave and what will influence them?
Let's be frank. My baseline scenario is stagnation with a slow downward slide in real prices; the market will be cleansed of bubbles inflated by cheap money in 2020–2023.
The primary market will strive to maintain prices at the current level despite declining demand. Possibly, we may even see a 2–3% increase over the year. But this will likely be a nominal story. The real purchase price through the system of hidden discounts, cashbacks, and "gifts" will remain flat or even go down.
The secondary market will be more honest. It is a market of private sellers, and they cannot hold out forever. There we will see a decline in average purchase prices of 5–10% from today's level, while the asking price may continue to rise due to the withdrawal of cheaper properties and expectations of increased availability of market mortgages. But what will be bought is not what is becoming more expensive, but what has a price adequate to the market situation.
The main factor for the market is the Central Bank's monetary policy. But it is not the rate itself that shapes trends, but expectations of it. Even if the regulator continues to steadily lower it, mortgages will not become cheap instantly. Banks factor in their long-term risks. And until the market believes that the high rate is gone forever, affordable mortgages will not appear.
Source: snob.ru