‘The depth of the drop in sales for everyone is about three times, but the price per square metre will not fall’
Vice President and Managing Director of the Tatarstan office of VTB Maryam Davletshina advises not to be deceived by false illusions
“In fact, there were many predictions that housing prices would fall, catastrophic figures of 30-40% were mentioned. But nothing like that is happening. At least in the primary market, prices will not fall,” said today Vice President and Managing Director of the Tatarstan office of VTB Maryam Davletshina. Despite the smooth growth of key interest rate, mortgages grew by 16%, car loans did by 55% — car manufacturers are subsidising the interest rate to a symbolic 0.01% and promise to keep soft interest until the end of the year. Large businesses go to the bank for investment loans — there are projects in the pipeline with a capacity of 10 to 100 billion rubles, but they are waiting for government support. More details are in a report of Realnoe Vremya.
Catastrophic figures were mentioned, but nothing of the kind is happening
Will housing prices fall or stay at the same level? Buy now or put it off for later? No one vouches for the accuracy of forecasts of the price situation on the housing market, but most citizens believed last year's predictions that prices would fall. It would seem, who would buy housing at 21% a year? In a word, a wait-and-see attitude prevailed — what if it comes true?
Vice President and Managing Director of the Tatarstan office of VTB Maryam Davletshina tried to dispel vain illusions. Answering journalists’ questions, she said that there is no point in expecting housing prices to fall in Tatarstan.
“In fact, there were many predictions that prices would fall. Catastrophic figures of 30-40% were mentioned, but nothing like that is happening. At least on the primary market, prices will not fall,” she assured the audience.
But she admitted that the cost per square meter will stop growing due to high credit.
“Where else can prices grow with high rates,” Maryam Davletshina reasonably added, explaining that “the growth potential is limited.” Although high prices are not a whim of developers. Now the prices for building materials and labour have risen sharply (plus 35-40%).
There is no point in expecting a decrease in prices on the existing market either.
“On the contrary, it is currently recovering. Developers will complete the projects they have started, and shift the delivery of new ones to the right and the commissioning dates. When the number of offers decreases, the existing market will get a breath of fresh air, believes Maryam Davletshina. In other words, if developers reduce or postpone the commissioning of new buildings, then prices in this segment will rise.”
Bought housing for 28 billion rubles
In anticipation of the cancellation of state support programmes, Tatarstan residents actively purchased housing. According to Maryam Davletshina, the volume of mortgages issued since the beginning of the year has increased by 16% — to 28 billion rubles. The main driver was family mortgages, which accounted for 39% of the total volume of issuance. Under this program, loans worth 11.3 billion rubles have been issued since the beginning of the year.
A mortgage with state support at a rate of 8% a year was the second most important. Until 1 July 2024, anyone could take it. It accounted for 24% of the total portfolio, or 7 billion rubles. Another 5.5 billion rubles were issued to borrowers under preferential IT mortgages.
The average mortgage bill in Tatarstan was 4.2 million rubles. But in Kazan, this figure was significantly higher. The mortgage repayment period has also increased.
“If they used to repay in 5-7 years, now it is at least 21 years,” she noted. At the same time, the delay is recorded at a minimum level.
She predicts that housing sales will be active among those who have the most delicious offers.
“In our opinion, those with the most interesting offers on the market will be in the most advantageous position. A clear concept of planning solutions, a good location, common areas. The depth of the sales decline for everyone is about three times, but still different. There are those who fell sharply, and some — not so much, and it depends on how tasty the product is. The depth of the sales decline is approximately three times for everyone, but the price per square meter will not fall,” the VTB branch manager reasoned.
After 1 July, or what bankers are preparing for
The peak of mortgage issuance was expectedly in June, after which the number of applications from borrowers began to decrease. In July, the volume of mortgage loans issued fell three times.
“In July, 2 billion rubles were issued against 5.5 billion rubles (in August 2023),” said Maryam Davletshina. In August, the downward trend continued — 1.8 billion were issued.
According to VTB's forecast, mortgages may fall by 35% this year. What can hold back sales? Firstly, this is a tranche mortgage, which covers 30% of the cost of housing before it is put into operation.
The borrower deposits funds into an escrow account in tranches. It is supposed that in one and a half to two years the rates will fall and it will be possible to refinance, said Maryam Davletshina.
Secondly, the scheme with escrow discounts, when the buyer receives a rate of 12.9% per annum at the expense of the developer who pays the bank a higher rate on the loan
Thirdly, subsidising mortgages by the employer. However, only KAMAZ has started working with this scheme in the republic. The rate its employees received is not disclosed.
New programmes to stimulate young specialists, workers in industry, science, and construction are being prepared to restart mass mortgages, but there are no exact parameters yet, and the bank does not know them. “But we are waiting and hoping that the construction market will be supported,” said Maryam Davletshina.
Interestingly, just a few hours ago, head of Sberbank Herman Gref predicted a drop in prices for new buildings. In his opinion, the first to expect a drop in prices is in Comfort and Comfort Plus segments. In general, it will take one and a half to two years to stabilise the situation on the mortgage market, Russian news agencies reported with reference to the head of Sber. So maybe the most interesting is still ahead?
Zero-interest car loans?
Car loans have shown explosive growth — since the beginning of the year, they have been issued for 15 billion rubles. The phenomenon is explained by the fact that automakers began to subsidise rates to 0.01%.
The issuance of auto loans has increased by 3.5 times. VTB expects an increase in auto loans by 55%.
“No one is going to cancel subsidised programmes. At one time, there were good subsidised mortgage rates, now the same thing is happening with cars,” she said.
“It is not like investors just put projects on the shelf,” noted the activity of large businesses Maryam Davletshina. “There are large projects in the works, no less than Alabuga. And the checks are completely different — 10, 20 billion and even more. But for confidentiality reasons, we cannot disclose them.”
Large businesses received loans for 176 billion, borrowings have increased since the beginning of the year by 35 billion rubles, due to the deal with Alabuga SEZ.