‘Those who bought apartments for resale after the New Year found themselves screwed’
In 2024, the Russian real estate market is preparing for a fall due to the expected closure of the preferential mortgage programme, which has been its main driver. Last year, the down payment on it was increased to 30%, and the maximum loan amount became the same for all regions. For these reasons, citizens began to massively buy housing in new buildings, which, according to the expert, is a way not so much to increase their money as to save it.
“The demand for eggs and buckwheat is also growing for a reason”
According to a study by Etazhi company, due to the uncertainty with preferential mortgages, Russians began to buy up housing en masse. Thus, the demand for new buildings increased by almost 60% in early January.
As Anastasia Gizatova, a real estate expert and head of Schastliviy Dom real estate agency, told Realnoe Vremya, the stressful situation on the market really led to an increase in the number of purchases, but this is not surprising:
“For example, a person wants to buy an apartment that costs 6 million rubles, and he has 1.2 million in his hands. So, starting in January, he will have to add another 600 thousand. Therefore, those who postponed the purchase have now hurried and entered into transactions. Besides, mortgage conditions have changed and the number of loans has become limited. All these changes have pushed people to purchase housing," the expert explained.
According to Gizatova, the situation with new buildings in Tatarstan is the same as in the whole country. “Nothing unique is happening in the republic," she said, noting that there are quite a lot of offers and very good demand on the market in Tatarstan.
“Real estate is not only a way to multiply, but also to save money”
According to Anastasia Gizatova, the termination of preferential mortgage programme will lead to that people will stop buying apartments in new buildings in such large numbers. At the same time, according to the expert, most of the real estate is purchased for investment purposes:
“If there were no preferential mortgages for new buildings, then no one would buy apartments in them in such numbers. If we look at the cross-section of demand and buyers, then 70% are investment purchases. Apartments are bought for rent, for resale, to save money. They are purchased under a mortgage and because the rate is low, it is quite profitable. Many did the following: since the mortgage rate was low, and the deposit rate were high, they did not buy apartments with their own money, took them under a mortgage and placed the available funds in deposits. They paid off the monthly payment at their expense. It was a very profitable scheme and people rushed to take advantage of it today," she said.
As Gizatova stressed, all those “investors” who bought apartments to sell them after the New Year, under the current conditions, found themselves screwed.
“Real estate is not always a way to increase money, but more a way to save it. When you want to save them and apply for a mortgage, then you need to think about it. At the moment, those who bought apartments for resale and wanted to sell them after the New Year found themselves screwed," the expert concluded.
What to do with mortgage, or How authorities cannot decide
Back in 2022, the Central Bank of Russia advocated the gradual curtailment of the preferential mortgage lending programme. According to Ruslan Bulatov, the deputy director of the Bank of Russia's Banking Regulation and Analytics department, the construction industry got hooked on preferential mortgages.
The Preferential Mortgage programme is valid in Russia until July 1, 2024. Under it, Russians can get a loan at a rate of no more than 8% for the purchase of housing on the primary market, as well as for the construction of an apartment building. The minimum down payment for this programme previously was 20%, but in December 2023, it was increased to 30%.
Also, at the end of last year, Deputy Prime Minister Marat Khusnullin said that the main preferential programme would probably not be extended. It is planned to continue, but, as Khusnullin noted, only for certain regions with weak demand. At the same time, it became known about the government's plans to consider a draft resolution with amendments to the preferential mortgage programme. The amendments were prepared by the Ministry of Finance of the country. The changes were made " to limit the very rapid growth of the mortgage portfolio”.
In turn, the rais of Tatarstan, Rustam Minnikhanov, proposed to increase the maximum loan amount for family and preferential mortgages from 6 to 12 million rubles. According to him, preferential mortgage programmes should be made indefinite by analogy with rural mortgages. Russian President Vladimir Putin agreed with these ideas, stating the need to consider the possibility of increasing the limit above six million rubles. Later, during a direct line, the head of the state said that the government was thinking about extending this programme.
Earlier this year, Tatarstan Minister of Labour and Social Protection Elmira Zaripova said that the republic would insist on maintaining preferential and family mortgages.
“Our main message in the Year of the Family, which was announced by the President of Russia, is aimed at maintaining a preferential family mortgage. This is our firm position. Today we see that it gives families a chance to see life horizons. No matter what we say, housing is the determining factor for a young family," she said.