Realnoe Vremya’s analytics: private housing construction in Tatarstan breaks records

In Tatarstan, in August, against the background of a general reduction in residential purchase and sale transactions and mortgages, the number of land purchase and sale transactions increased.

According to Tatarstan Statistics Service, 325,8 thousand square metres of housing were commissioned in August, while within the framework of individual housing construction (IHC) — 290,3 thousand square metres. In general, almost 2.5 million square metres of housing were introduced in the republic for 8 months of 2022, including residential housing — more than 1,7 million square metres. Compared to last August, the volume of residential housing commissioning increased by 59,4. So many private houses have never been commissioned in Tatarstan.

In general, this fits into the all-Russian trend. According to a survey conducted in August, Dom.RF and VTsIOM, about 68% out of 61,8 million Russian families consider an individual house the most preferred type of housing. More than half of Russians living in apartment buildings said they would like to move to an individual house — 19,7 million families.

Residents of million-plus cities are less likely to think about moving to an individual house, but even here the majority of citizens (60%) consider such housing ideal for themselves.

The main reason why citizens cannot afford to buy and build a private house is the lack of money. At the same time, 54% of citizens who want to move into a house would be willing to consider a mortgage for its construction.

The actual issuance of mortgages for residential housing, according to the Dom.RF research, is several times lower than the willingness of people to take out such a mortgage. For example, the share of mortgages on residential housing in the total mortgage issuance did not exceed 5% in 2021-2022. About 8 thousand such loans were issued in the first half of 2022. This is due to the lack of standardisation of the private house construction market, high rates due to high credit risks and operating costs of banks. At the same time, houses themselves have low liquidity as collateral for the bank.

“An increase in the number of banks offering preferential programmes could solve the problem”

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  Andrey Savelyev Vice President of the Guild of Realtors of the Republic of Tatarstan, Director of NLB-Nedvizhimost

  Individual housing construction is the only segment in the real estate market that is now showing growth in terms of the number of transactions, demand, and price growth.

  A lot of developers have entered the market this year. There are a lot of constructions. Everything is explained quite simply: today, a country house is 2 times cheaper than an apartment. Studio apartment on the primary market with an area of 40 square metres costs the same as a house with an area of 120 square metres.

  It is possible to get a mortgage for a country house today, one just need to understand that it will usually be at 9,5-10% per annum. There are also two preferential programmes on the market: subsidised mortgage programme (at 5-6%) and rural mortgage (at 2,7%). But it is difficult to get a loan for them: they run out very quickly. And, of course, there are no such rates as in the primary multi-apartment housing market, where there it may be 0,1%, in the residential housing market.

• Alexander Perveev Head of Sales Department of the XXI Vek at FLAT realty agency

  The increased demand for suburban real estate was strongly influenced by the period of self-isolation, when we spent all our time in apartments. The demand for the construction of houses persists even now, and for the most part, the special military operation has not affected it much.

  In Kazan, in comparison with other regions of Tatarstan, suburban real estate has always been well developed, and when it became possible to build own house in a short time using a cheap mortgage, it became a special impetus for the market. Today, it is cheaper to build a house of 100-150 square metres than to buy a two-room apartment in a residential building built in 2000.

  Indeed, not all banks give mortgages for the construction of private houses. Sberbank, Dom.RF, and Rosselkhozbank have working programmes. But there are certain conditions for obtaining a loan from banks. DOM.RF and Rosselkhoznadzor must be built by accredited contractors. Sberbank does not require accreditation of contractors, but a guarantor is needed for the construction period and an additional pledge, which it is not always possible to find.

  An increase in the number of banks offering preferential programmes could solve the problem.

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  Andrey Simakov Director General of Bogatyr Company

  The construction cycle of a private house is one and a half to two years. Therefore, the current situation is a consequence of the boom in increased demand for suburban areas and low-rise housing construction that was in the pandemic. People then bought land plots, built houses and have begun to commission them this year.

  In addition, the rate of square metres commissioning is also affected by the legalisation of buildings. It is not a fact that what is being introduced now as been built this year. Previously, there was less control over the registration of built houses and extensions to them. A person could build a house and not register it, because it is unprofitable for him: the tax is imposed immediately.

  Now there is more control over individual housing. And there have appeared more organised housing developments. We alone are implementing eight suburban projects. There are also other major players, such as Corner, implementing a large project. There are more new developers who are building on one project.

  The current uncertainty, of course, is affecting the market of individual housing construction, people have suspended the purchase of land plots and the construction of houses.
  
  The August increase in the registration of transactions for land plots is no longer indicative. Now we need to look at the figures of September-October. I think there will be a serious drawdown.

  The forecast will largely depend on how the global political situation will change and what kind of mobilisation will be in connection with the ongoing special military operation. Someone is leaving now, someone is not making any decisions, waiting. In any case, the market is waiting today, the population is living in a saving mode. There is information that people stop paying utility bills.

  There are mortgage programmes in large banks for the construction of private houses — these are Rosselkhozbank, Sberbank, VTB and Dom.RF. Another question is that it is more difficult to get a loan for the construction of a house: the approval procedure is longer, there are more requests for additional documents. And there are more rejections, too.

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  Ilyas Gimadov owner of Khansky Dom construction company Vice President of the Association of Residential Housing Developers

  In individual housing construction, it is the volume of commissioning that is growing, not construction. This year, according to my observations and surveys, construction volumes have fallen by at least 40 percent.

  The previous year was record-breaking for self-build construction. Now those houses that were built last year are being registered. That is why we see such large volumes of commissioning in the statistics of the Federal Register.

  We will see the real statistics of this year in six months. I think Rosreestr will show that the input volume has dropped at least twofold. For example, if we take May-June of this year, then, according to open data, 60 apartments were sold for the whole of Kazan and only 70 transactions took place in residential housing. This is very little, then the volume of transactions fell by almost 70 percent.

  Now we are also seeing a decline in applications — by about 50 percent. Many people are being in an uncertain situation today, some of our clients have been mobilised, many are in a panic and do not know what to do. I conducted a survey among entrepreneurs in my social networks: 53 percent have frozen, the remaining 47 percent are thinking about closing their businesses. I hope that the situation will stabilise in the near future and demand in the market will appear.

  As for mortgages, the situation, on the contrary, has become better. Today we have about 90 percent of transactions involving banks. Many programmes have been launched, in particular, by Dom.RF. Sberbank also works well. As for the rest of the banks — I would like them to work better.

  The lack of preferential programmes for secondary housing also slows down the market. Our clients, for example, need to sell an apartment, but they can't, because it's profitable for everyone to buy a primary housing in mortgage. Secondary housing is being in a standstill — and this chain does not work.

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  Artur Khafizov Director General of Little Tokyo LLC

  Over the past 3-5 years, Tatarstan has experienced a jump in the cost of a square metre of multi-apartment housing. Compared to other regions, our growth turned out to be much higher. The gap between the cost of multi-apartment housing and residential housing has increased so much that many have decided to buy their own house.

  Indeed, there are a lot of developers, but the self-build construction market is also undergoing changes. Projects of integrated development of territories are in trend and in great demand, when the construction of a residential complex is carried out by one developer in a single architectural style. Such projects already provide for engineering infrastructure, roads and well-maintained public areas. There are few such projects under construction in Kazan. As an example, I can give Little Tokyo, Garden and Bright Park.

  Lending for the construction of private houses is indeed a problematic issue. For banks, this construction sector has always been associated with risks. Therefore, loans were issued reluctantly. Now there is a preferential mortgage programme, when the rate for building a house is subsidised by the state. But this did not reduce the problems of banks. Today it is possible to get a mortgage on a house, but the borrower's assessment system is quite complex and time-consuming.

  Today, people are in a state of shock and are afraid to take any steps. I advise you to take a sober look at the situation. It is very important to have own housing at the moment, especially in families where the breadwinner is included in the list of persons subject to mobilisation. I'll explain why. If a man is called up to join the Armed Forces of the Russian Federation, the family remains safe in their own housing. Even if it is a mortgage option. We wish everyone to return alive and well, but even with a different outcome, the state will support the family, either partially covering the mortgage, or completely.

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  Anastasia Gizatova realtor in Kazan, head of the Academy of Sciences “Happy House”

  The record in the self-build construction market is due to that this market is fairer and clearer in terms of pricing. The cost of houses has not increased as much as for apartments. If for 8 million rubles you now buy only a two-room apartment, then in the suburbs of Kazan with this money you can buy a cottage with an area of 120 square metres, and you will still have parking and 6 acres of land.

  It is not only banks that are slowing down the market today, but also a low range of houses and ready-made solutions. And, of course, the mortgage is seriously limiting, under the terms of which you have to finish building the house within a year, which is absolutely unrealistic. This is possible only for organised developers and for frame housing construction. Traditional wood and brick cannot fit into this concept.

  In general, self-build construction is a more stable segment of the market. Therefore, I don't think the current situation will affect it much. Now self-build construction is a kind of symbol of psychological stability: people want to be in their house, not in an apartment.