Ufa housing prices growing fast
Should one expect the market to stabilise and will the quality of infrastructure improve?
In the last two years, Ufa new builds have become expensive by 30% on average, market players claim. All types of flats have gone up in price. Moreover, the biggest growth has been registered in the last several months. So in late 2020, a flat could be bought for 64,000 rubles per square metres, now a square metre is on average 81,000 rubles. Realnoe Vremya’s correspondent found out what provoked the surge in prices, what offers are in the highest demand if one should expect the price for new houses to reduce short-term.
Prices are growing faster and faster
According to Bashkortostan’s statistics service, in the third quarter of 2020, the average price of a square metre in new builds of the republic was 65,600 rubles. By the end of the second quarter of 2021, this number rose to 73,800 rubles. It isn’t hard to calculate that a square metre became 8,200 rubles more expensive in less than a year. The difference between these periods in 2019 and 2020 was just 3,600 rubles, the price grew from 61,500 to 65,100 rubles then.
Prices in Ufa are by far higher. According to different real estate sources, the price for a square metre in the new housing market nowadays varies from 88,000 to 93,000 rubles. While last October, a square metre in a Ufa new build was assessed at just 69,000 rubles. Today a one-bedroom flat in the capital of Bashkortostan will on average cost a buyer 3,3 million rubles, 4,5 million rubles will have to be paid for a two-bedroom flat, while a three-bedroom flat is 6,6 million.
Second-hand homes are also rising in value. The growth was from 71,000 in October 2020 to 84,000 rubles per square in October 2021. As for the most popular districts of Ufa — Kirov, Soviet and Oktyabrsky, here the average price for a square metre of a second-hand flat is from 89,000 to 91,000 rubles. The cheapest options are in Kalininsky and Demsky Districts where a square metre is 69,000-72,000 rubles.
Developers compensate for the costliness of construction materials
Specialists say the prices are growing because of more expensive construction materials. To compensate costs for housing development, developers are raising prices, while due to a lack of new houses, there is enough demand for those blocks of flats that have already been built.
Director of Plan A analytic agency, construction expert Ivan Zorin shared his opinion about the causes of the price rise with Realnoe Vremya:
“The housing price growth is conditioned by a noticeable rise in the price for construction materials that has appeared including due to a global logistic crisis. Due to mass delays in supplies, timber and metals have also become more expensive. Demand for construction materials hasn’t decreased, while supply suffered because of mass disruptions of marine supplies, which at last influenced the prices of a square metre. The logistic crisis should go away some time later, which means that prices for construction materials should go down.
Yelena Andreyeva considers that today’s mortgage rate doesn’t have a decisive influence, it is rather a psychological factor.
“Now our market has an average activity, a lot of developers have faced a decline since the second half of the summer. Somebody links this with public support, but in fact, there aren’t new projects. There were too many purchases during the previous 1,5 years, and now demand is accumulated here. The activity will highly likely rise, as it usually happens, next spring. It is a standard seasonal pattern, a standard cycle of the market. It cannot be constantly active. There must be periods of pent-up demand.”
Prices are growing, but the quality of infrastructure is under question
At the same time, citizens of Ufa are dissatisfied not only with the growing prices in the construction market but also the fact that the infrastructure surrounds new builds often seriously fall behind in development: there is a deficit of parking, schools and kindergartens.
Nowadays new builds are erected, but kindergartens and schools even in neighbouring districts don’t have sports. However, the site where a school should be built according to initial plans is still empty. Homeowners in the new residential complex on Shafiyev Street complain about the absence of parking lots. The project included parking, but it was refused during the construction. As a result, the residents fear that there will be a transport collapse on the street and at neighbouring courtyards after the blocks of flats are delivered.
Some Ufa citizens are sure that the delivery of homes will provoke a real explosion of social tension in the microdistrict that urban authorities don’t try to prevent at all.
Housing can become cheaper
However, despite all the problems, real estate experts believe that housing will keep becoming costly. To reduce costs because of more expensive construction materials, developers will probably deal with only big projects.
“To get a good profit, developers will deliver precisely large-scale projects, optimise construction costs thanks to the scale. Inexpensive local projects should unlikely be expected,” says head of the realty agency Yelena Andreyeva.
Also, the market dictates a rise in the demand for cheaper shell and core options.
“Earlier, we assumed that the market will move towards the basic finishing with design projects and furniture. But now because of the prime cost factor, it turns out to be the other way round — the market is going back to the shell and core condition,” notes Yelena Andreyeva.
The absence of a big number of new projects is one of the factors that favour the growth of prices in the long term. In the expert’s opinion, the upcoming mass development of Zabelye area is still a too remote prospect to have an impact on the price dynamics.
“This is just news so far. This won’t happen quickly. It is a prospect of maybe not even five but 10 years, networks will be created first. This is anyway not within the Ufa peninsula. This will lead to a situation in which flats will be offered there for a lower price than in the city.”