- The state of the primary housing market
- New buildings are squeezed out of the Moscow Ring Road
- Mortgage is reborn
According to sociological surveys, more than 70% of the Russian population is in need of better housing conditions. The housing issue is relevant for the whole country, however, in this article we will try to focus on the capital’s housing market.
In general, after the crisis, the market for new buildings in the capital began to revive, new projects appear, most of the frozen construction projects have resumed. Received a new impetus to development and mortgage.
The state of the primary housing market
As you know, during the crisis, many developers have decided to freeze their construction. Gradually, the market for new buildings in the capital begins to revive. Already in 2010, there was a tendency for the revival of this segment of the real estate market, the revival is especially noticeable in the construction of economy-class housing, which in the post-crisis period is in great demand. Now the confidence of potential buyers in this market segment has grown significantly. Household incomes have stabilized, effective demand for housing has appeared, new projects have begun to appear on the market, construction has also intensified at many facilities that were suspended during the crisis..
By the end of 2010, the share of finished housing in the total supply of economy-class apartments in the near Moscow region amounted to 50% – these are objects that have already been commissioned or are at the final stage of construction (19% and 31%, respectively). The share of projects at the initial stage of construction is 44%. The remaining 6% are frozen construction sites or objects with sluggish construction.
Now for potential buyers, the decisive factor is the optimal ratio of price and quality..
According to experts from the MIEL Analytical Consulting Center, in January 2011, for the first time, 40 houses entered the capital market, which is 7.4% of the total number of proposed new buildings. Most of them are middle class houses, as well as new buildings in the early stages of construction work. The appearance on the primary market of new and relatively inexpensive offers generally led to a decrease in prices. The fall in prices, however, is not significant – 3.2% in rubles, and 0.1% in dollars.
Now for potential buyers, the decisive factor is the optimal ratio of price and quality. That is why people choose new economy class buildings. In addition, the opinion that economy-class houses are very low-quality buildings is absolutely not true. The combination of medium-priced, yet high-quality materials with the latest developments in the construction industry makes it possible to build reliable and affordable housing.
However, real estate prices, especially in Moscow, have been and remain quite high. According to the results of January this year, most of the proposals (46%) were noted in the price segment from 100 thousand to 150 thousand rubles per sq. M. For apartments in the price range from 150 thousand to 200 thousand rubles per sq. m. accounted for 37% of the total supply, in the range from 200 thousand to 250 thousand rubles – only 10%. The minimum offer turned out to be for apartments with a price of up to 100 thousand rubles per sq.m. – 7%.
The average price for economy-class housing in January amounted to 60.2 thousand rubles per square meter. m, middle class – 59.2 thousand rubles per sq. m, business class – 101 thousand rubles per sq. m.
As for demand, according to the results of January 2011, 1- and 2-room apartments were traditionally most in demand, accounting for 48% and 37%, respectively. 3-room apartments expressed a desire to purchase 14% of all buyers, multi-room apartments – only 1%.
New buildings are squeezed out of the Moscow Ring Road
It should be noted that recently, there has been a tendency to displace new buildings outside the Moscow Ring Road. The thing is that there has long been a shortage of construction sites in the capital, and those that exist are quite expensive, which, undoubtedly, affects the cost per square meter. So it turns out that building panel houses in Moscow is not very profitable now.
As a result, the main activity of developers is now concentrated in the Moscow region, which is significantly leading in terms of new housing construction. From 5 to 12 new objects enter the market of new buildings in the Moscow region per month.
Currently, many new economy class houses have been built and are being built in the following districts: Kozhukhovo, Solntsevo, Peredelkino, Lyubertsy, Mitino, Yuzhnoye Butovo. Within the Moscow Ring Road in the last 2 years, construction was carried out in the areas of Ochakovo, Marfino, Sviblovo, Chertanovo, Otradnoye, Zyuzino. At the moment, about 40 new economy and comfort class properties are being actively built and sold in the capital. 83% of all new economy class buildings are located in the Southern Administrative District. In the South-West Administrative District – 7%, in CJSC – 6%., The least of all objects in the South-East Administrative District and North-Eastern Administrative District – only 2%. In the CAO, SZAO, VAO and CAO there are no new buildings in the implementation.
Mortgage is reborn
When buying a new apartment, a potential buyer decides for himself two main questions. Firstly, he needs to find suitable housing, therefore, the developer company that builds this housing. Secondly, if the buyer does not have enough money to buy housing, then besides choosing the apartment itself, one more issue will have to be solved – finding money to pay for the missing part of its cost. In this case, the solution is a mortgage loan.
As for the first question, it is not difficult to find an apartment, developers have become more active, and the supply of apartments on the market is only growing and, according to forecasts, will continue to grow. With regard to mortgages, we can also say that, since the effective demand of the population is growing, mortgage lending is also reviving..
Most banks lend to projects under construction only if the box of the house is already ready and all the necessary communications are connected.
According to the agency “Miel”, currently 11 capital banks offer loans for housing in new buildings. A minimum down payment of 10% is required by Sberbank, Russian Mortgage Bank and Moscow Credit Bank. The minimum interest rate in rubles is offered by VTB 24 bank (the campaign “With a New House”, which was extended until February 26, 2011): before registration of property rights, the rate is 9.95-12.35%, after registration of property rights – 7.5- 9.85%. Average interest rate is 13-14% per annum.
At first glance, it may seem that the lending conditions are almost pre-crisis. However, everything is not so simple. Most banks lend to projects under construction, only if the box of the house is ready and all the necessary communications are connected, it is very difficult to get a loan to buy a home at the initial stage of construction. Sberbank and VTB-24 have more free conditions, but these banks offer to buy an apartment from their list of accredited new buildings. Consequently, the choice of the borrower is very limited. However, VTB-24 has the longest mortgage lending period – up to 50 years.
Based on the dynamics of the primary housing market in Moscow, it can be assumed that in 2011 the construction of new buildings will continue to grow. Demand, as you know, gives rise to supply, and demand is currently constantly growing. All the same demand for housing gives rise to an increase in the supply of mortgage lending. People are ready to overpay for cherished square meters, and banks are increasingly beginning to trust the population after the crisis. The emerging tendency to move the main construction sites outside the Moscow Ring Road will also only intensify, due to the fact that housing there is cheaper and there are much more sites than in the capital. Consequently, in the near future, Moscow may face a shortage of new economy-class housing.