Secondary real estate market continues to stall in Russia
But Kazan is still in the top three cities with the most expensive apartments after Moscow and St. Petersburg. Now a secondary apartment is on sale for an average of 3 months longer than a year ago.
Kazan is the second among the major cities of Russia in terms of the rise in price of secondary housing in May. Last month, the cost per square metre in the secondary market of the city increased by 0.8% to 163 thousand rubles. The national average growth was a “negligible” 0.2%. All these statistics are from the evil seller, market participants say: observing the excitement in the primary housing market, apartment owners set prices in ads, completely not focusing on demand. The secondary market has been going through difficult times since the Central Bank raised the refinancing rate, and mortgages have become almost unaffordable to most buyers. What can we expect in the secondary housing market, and whether the state is ready to support it with subsidies — in the review of the analytical service of Realnoe Vremya.
Price increase in Russia is about zero
The growth of prices for secondary housing in the largest Russian cities began to slow down: on average, in May, the secondary housing in million-strong cities added an insignificant 0.2% to the price, while in April this growth was 0.7%. A similar picture is observed in the horizon of the year: this May, relative to May 2023, the price increase for ready-made housing in million-plus cities amounted to 13.8%, however, in the previous month (April 2024 to April 2023) this figure was higher and amounted to 14%, Yandex Real Estate cites data.
In May, the cost per square metre in the secondary market of Kazan amounted to 163 thousand rubles, over the past month it has increased by 0.8%. By the dynamics of price growth in the secondary market, the Tatarstan capital took the second place, second only to Rostov-on-Don. At the same time, over the past year (relative to May 2023), secondary housing in our city has risen in price by 21.5%. Kazan demonstrated one of the highest price growth rates for the year, second only to Chelyabinsk. The average full price of a secondary apartment in the Tatarstan capital amounted to 7.5 million rubles in May. According to this indicator (as well as the price of a square metre), Kazan is second only to Moscow and St. Petersburg.
“Relative to last month, the volume of offers on the secondary market is stagnating (-0.2% in all million-plus cities)," comments Evgeny Belokurov, the commercial director of Yandex Real Estate. “We expect further accumulation of offers on the secondary market, which will be fueled by the ongoing commissioning and transition to the category of secondary real estate of objects under construction today, and also, the lengthening of the transaction cycle in the secondary market: now a secondary apartment is sold on average 3 months longer than a year ago.”
The top 5 million-plus leaders in the cost per square meter of secondary real estate has not changed relative to last month: it is still Moscow (332 000 rubles, -0.1% per month), St. Petersburg (202 000 rubles, +0.3%), Kazan (163 000 rubles, +0.8%), Nizhny Novgorod Novgorod (128 000 rubles, +0.5%) and Krasnoyarsk (117 000 rubles, +0.2%).
In the picture of monthly dynamics in Kazan, there is a decrease in the cost of secondary studios by 1.1%. One- and two-bedroom apartments in the ready-made housing market rose in price by 0.7%, three-bedroom apartments — by 2%, four- and multi-room secondary lots increased in price by 2.7%. Compared to May 2023, the price of a square metre of ready-made studio apartments and one-room lots increased by 19.1% and 19%, respectively.
The positive dynamics in the “two-piece” segment is even more pronounced: they have risen in price by 19.5% over the year. Three-bedroom apartments on the secondary market added 24.8% to the average cost per square meter, and four- and multi-room lots, compared with May 2023, rose in price by 22.6%.
Today, the median cost per square metre of studios in the secondary market of Kazan is about 190 400 rubles, one-room apartments — about 180 000 rubles. A metre of ready-made housing in the two-bedroom format is 157 200 rubles. A square metre of three-room apartments from the owner costs an average of 152 300 rubles, four- and multi-room apartments — about 147 700 rubles.
At the same time, the median total cost of studios in the secondary market of Kazan in May amounted to about 4.1 million rubles, one-room lots — 6.5 million rubles, two-room lots — 8.5 million rubles, three-room lots — 11.9 million rubles, four- and multi-room lots — 17.9 million rubles.
“We assume that a more noticeable increase in the cost of two-bedroom, three-bedroom and multi-room apartments is associated not so much with the real rise in price of these lots, as with that these lot formats are traditionally more expensive. High-budget apartments of these formats are on display on the market for longer and affect the overall picture of price dynamics in the room segment," Belokurov commented.
Prices of aggregators do not correspond to reality
People are still selling apartments at the old price, but real sales are at a good discount of 200-300 thousand rubles. “Without bargaining of 200-300 thousand, transactions do not take place. Prices have gone down, although it is not much visible from the ads," says Saveliev.
Besides, it is also wrong to talk about such a concept as the average cost per square metre in the secondary market, the expert is convinced: “Secondary cannot be estimated by square metres. The types of housing are completely different. Khrushchevka and a house built 5 years ago are secondary, but the price tags per square metre will be completely different. If we take some guest houses and communal apartments built in the 1980s, they generally cost 180 thousand rubles per square metre.”
Forecasts for the secondary market are not optimistic. Today it strongly depends on the size of the key rate of the Central Bank of the Russian Federation, which will definitely not be lowered in July. “Mortgages for buyers of secondary housing will continue to be unaffordable," Andrei Saveliev notes. “July and August will be very bad in the market. There may be some movement in September.”
Saveliev hopes that some additional measures will be devised to support the secondary sector, some programmes to increase the purchasing power of the population, maybe some subsidies: “I understand that the key rate will not decrease. Therefore, the market will have to come up with something, and I hope that some support measures will appear.”
Subsidies from the state are not expected
An exception may be some social programmes in small towns or in cities where there is no construction at all, but Tatarstan is not included here, Gizatova notes.
One should not expect the secondary market to be supported, he agrees. Prices on the secondary market will increase gradually, not much, but the trend will tend to the cost of new buildings, he believes.
“The secondary market today depends on two parameters — on how attractive the object is in price and how unique it is. If it is unique, there are no cheaper analogues and someone needs it in this location, they will certainly buy it. But we have very large residential areas, and there is a lot of competition between apartments. If there are cheaper analogues, then people consider them," says Ruslan Khabibrakhmanov, the director of Flat real estate agency.
Yandex statistics, according to him, reflect rather the expectations of sellers: “They look at the market of new buildings, understand that apartments are very expensive in housing under construction, and put their apartments at a price above the market, so it should take some time for them to realise this and make the price more adequate”.
Transactions on the secondary market are underway today, the market has not risen, but there are fewer of them. “People began to look closely, especially since the news constantly says that the market is overheated and will decline. Many are waiting, while others, on the contrary, understand that inflation is unwinding and are trying to save their funds in housing. We are now seeing a fairly strong demand for small-sized apartments," said the director of Flat.
Ruslan Khabibrakhmanov also does not believe in the emergence of support measures for the secondary market. “There is no point in subsidising the secondary market. This is not a locomotive for the country's economy. Subsidies on the secondary market would only accelerate the exchange of apartments between people, and perhaps, this would also serve to increase the cost per square metre," he suggests. “We still need to level the market by removing state support from new buildings. However, this is a very painful issue, and most likely, it will not be done abruptly.”