‘About 60% of buyers have left the market’: housing prices declining in Kazan
Real estate market began to be “buried” back in March 2022. It was expected that it would be buried under sanctions, as well as the country's economy and the purchasing power of the population. However, the promised disaster did not happen, and housing prices rose above official inflation last year. Another collapse of the market was predicted after a sharp increase in the key rate. What is happening in the real estate sector of Kazan in the first months of 2024 and whether gloomy forecasts are coming true — in the review of the analytical service of Realnoe Vremya.
Demand for secondary products has weakened by almost 30%
According to Avito Nedvizhimost, the volume of apartment supply in the secondary housing market of Kazan decreased by 33% in February compared to the same month last year. The demand for apartments on the secondary market has weakened by 29.5% over the year, Sergey Eremkin, the head of the secondary and suburban real estate department at Avito Nedvizhimost, told Realnoe Vremya. The reason is that the mortgage has become almost unaffordable.
In the segment of new buildings in Kazan, apartments, on the contrary, began to be sold faster than last year — the average sale period decreased by 10.2% — from 177 to 159 days. The exposure time of one-room objects has decreased especially noticeably — by 26.5% (from 196 to 144 days), Yeremkin noted. In the market of new buildings in Kazan, the volume of supply has increased by 4.2% over the year. However, demand has hardly changed over the specified period (-0.4%).
The secondary market grew more dynamically in price in 2023. The average cost of secondary housing in Kazan for the year, according to Avito Nedvizhimost, increased by 22% — from 6.1 million rubles to 7.4 million rubles. The average cost of apartments in new buildings has increased from 7.8 million rubles to 9 million rubles, or by 15.7%.
Average cost of apartments in secondary market of Kazan in February 2023 and 2024
ROOM TYPE | AVERAGE PRICE OF APARTMENTS IN FEBRUARY 2023, MILLION RUBLES | AVERAGE PRICE OF APARTMENTS IN FEBRUARY 2024, MILLION RUBLES | YEARLY DYNAMICS |
studios | 2.9 | 3.6 | +24% |
one-room apartments | 4.9 | 6.15 | +25.5% |
two-room apartments | 6.6 | 7.8 | +18.5% |
three-room apartments | 8.7 | 11.5 | +32% |
four-room apartments | 14 | 18 | +28.6% |
Avito Nedvizhimost data
The only exception is studio apartments in new buildings — they have risen in price by 56.5% over the year. For comparison, in the secondary market, the price increase for studios was 24%.
Average cost of apartments in new housing market of Kazan in February 2023 and 2024
ROOM TYPE | AVERAGE PRICE OF APARTMENTS IN FEBRUARY 2023, MILLION RUBLES | AVERAGE PRICE OF APARTMENTS IN FEBRUARY 2024, MILLION RUBLES | YEARLY DYNAMICS |
studios | 5.1 | 8 | +56.5% |
one-room apartments | 6.7 | 7.9 | +17% |
two-room apartments | 8.6 | 10 | +16% |
three-room apartments | 10.6 | 12.5 | +17.7% |
four-room apartments | 11.3 | 13.5 | +19% |
Avito Nedvizhimost data
“There is no catastrophe”
“Prices, of course, have increased since last year. But real estate is not the only “product” that has risen in price," Gizatova stressed. “Prices for food, works, repairs, and construction of houses have increased. If you want to buy a bicycle for a child or skis, you will see that they have also risen in price. All product groups have risen in price. Apartments are not left out, they have also been affected by inflation.”
Prices are influenced by three factors — inflation, developer costs and demand, she noted. Demand today, according to her, can be a deterrent and prevent prices from rising, at least in the secondary market.
“Apartment prices are going to rise in 2024, but within the range of official inflation, because demand, taking into account the policy of banks and mortgage rates, will decrease," the expert believes. “Demand will focus exclusively on the primary market and on certain programmes — IT and family mortgages.” According to the expert, demand will not be of a strong investment nature, as it was in 2022-2023.
Prices for “secondary” housing have been declining for the second month in a row
Gallyamov believes that it is impossible to make forecasts now: much will depend on changes in the key rate, the next meeting of which is scheduled for March 22, as well as the dynamics of real incomes of citizens. Sales volumes are starting to slowly, but uncritically, lag behind the dynamics of last year.
“There was no increase in apartment prices in January and February, discounts and offers appeared at many facilities," says Ruslan Khabibrakhmanov, the director of Flat real estate agency. “Mortgages are expensive, and they are unlikely to become cheaper in the near future. Therefore, I think that in 2024 the prices of apartments in Kazan will decrease," he predicts.
Demand for apartments in Kazan has already fallen, so real estate prices will be adjusted. And this adjustment will stop only when the Central Bank of Russia reduces the refinancing rate, the expert concluded.