‘A fall awaits us but...’: investors leaving the real estate market forever
Housing prices are going down in Kazan, investors have lost the interest in this asset
Mostly three-bedroom flats cheapened in the Kazan new real estate market and studios did in the second-hand market in September. Investors started to leave the crashing market, experts explain. Read about what awaits the housing market amid a geopolitical storm in a review of Realnoe Vremya’s analytic staff.
A square metre in Kazan new builds cost 153,000 rubles on average last month: in the last month, its price is 0,6% down. There has been a fall in the cost of a square metre in one-bedroom flats (by 0,6%, up to 181,400 rubles), two-bedroom flats (by 18%, to 156,400 rubles) and three-bedroom flats (by 2,2%, to 142,400 rubles), Realnoe Vremya was told by Avito Real Estate’s Director Nikolay Popov. A square metre of studios, which are a very popular format of “investment” flats, in contrast, became 1,7% more expensive reaching 182,000 rubles.
The average cost of a square metre in the second-hand housing market, according to the company, was 126,000 rubles. Compared to August 2022, it hasn’t changed. However, prices for one-bedroom flats in the second-hand market reduced by 0,7%, to 140,700 rubles. Studios also became cheaper (by 2,7%, to 130,400 rubles) and four-bedroom and bigger flats did too (by 0,7%, to 104,300 rubles).
“Sellers often lower the price to speed up the sale of the facility because now it is the client’s market,” explains Nikolay Popov. “The one who is ready and can pay money start to pick a flat longer and in a more meticulous way.”
Number of mortgage deals is up despite the crisis
“Despite the complicated situation, turbulence, we again see gradual growth of activity in the real estate market after June,” noted vice head of the office of the Federal Service for State Registration, Cadastre and Cartography in Tatarstan Liliya Burganova.
The number of mortgage deals in the real estate market rose by 85,8% in Kazan compared to the failure in June. In June, 1,200 mortgage deals were registered in the Tatarstan capital, 2,100 were in September.
Tatarstan residents in general took out 37,6% more mortgage loans in September than in June. The first summer month showed the lowest number of mortgage deals amid a sudden rise in interest rates. 3,800 mortgages were registered in Tatarstan in June, 4,300 — in July, 4,500 — in August, 5,200 — in September. Also, the number of deals in the second-hand market increased by 26%: from 6,000 across Tatarstan in June to 7,700 in September.
Today most flats in Tatarstan are purchased on credit with state support and through a family mortgage programme, noted Vice Director General of #Suvarbuilds in Sales and Marketing Elvira Galyautdinova. In the last eight months of 2022, according to her, Tatarstan was first in the Volga region in the number of mortgages. “The extension of the family mortgage for almost a year became an effective state support mechanism for both buyers and developers,” she says.
Developers: “Life goes on”
“The first half of September lived up to our expectations — an obvious rise was noticeable, and we almost reached quite a big amount of sales we had planned. Nowadays due to clear reasons people don’t care about buying a flat, they are concerned about other things,” says Director of SMU-88 Group of Companies Nail Galeyev. “Everybody is simply alarmed, and this doesn’t encourage making any serious decisions like choosing a new home. And it is not that people cannot afford buying a flat, they simple have other things to worry about now.”
Galeyev is sure that there is no foundation for a price fall: “We simply cannot lower then anymore.” The prime cost of construction has seriously increased in the last several years. The total transition to escrow accounts, pandemic-related restrictions, a serious appreciation of construction materials, sanctions pressure have influenced it, the director of SMU-88 enumerates.
“The market will continue its gradual slowdown in October and stabilise in November, such shock ups and downs last for a month or two, no more,” he forecasts. “Also, support measures for families of mobilised men are taken, this also should influence the buyers’ mood.”
Vice Director General of Unistroy Iskander Yusupov notes that the real estate market has notably collapsed since late September. “In particular sales nowadays have fallen by about 50% compared to the first 20 days of September,” he told Realnoe Vremya. “The reasons are obvious too: uncertainty and the general anxiety in society.”
However, he says that clients sometimes, on the contrary, hurried to make a purchase. Somebody even received a conscription letter and signed a deal almost on the departure day. “Sales have shrunk but haven’t disappeared. There are new mortgage bookings, there is trade-in, subsidised mortgage... I mean life goes on,” Yusupov commented on the situation.
According to his forecasts, the market will recover, moreover, this can happen soon enough. “In fact, today’s slump in sales is nothing compared to the collapse in April,” the interlocutor recalls. Iskander Yusupov doesn’t see prerequisites for a fall in the price of a square metre, at least in the Kazan market. During instability and short-term fall of demand in the market, there will appear offers stimulating purchases.
Sales in some residential complexes in #Suvarbuilds quadrupled in late September compared to August, says Elvira Galyautdinova. But in general the mobilisation impacted the general mood: buyers are being in expectations. “We saw some decrease in applications after 21 September, but period when some deals were put on hold didn’t last much,” she says.
She hopes that the economy will stabilise and the fourth quarter will be higher in sales. “There is traditionally an increased demand for housing by New Year,” expects Galyautdinova.
#Suvarbuilds also believes that prices won't collapse. “The situation with prices and demand mainly depends on the general political and economic stance, but prices for new builds aren’t expected to fall because banks won’t allow selling at a loss. Prices in all residential complexes of #Suvarbuilds are fixed according to business plans adopted by banks,” explains Elvira Galyautdinova. “There are some situations in the second-hand market when homeowners sell their flat with a discount due to the mobilisation, but it is a temporary situation.”
“There is no investment potential in the real estate market”
Tatarstan