Rising apartment prices

The supply on the housing market in Moscow over the past year has decreased by 40% and continues to decline. The deficit led to the fact that house prices in Moscow rose by another 36.4%. One-room apartments in panel houses are becoming more expensive than others.

In 2005, the rise in prices for apartments in Moscow amounted to 36.4%, and in the first half of the year, apartments rose on average by only 9.7%. But in the second, active growth began, and apartments rose by another 24.4%. The rise in prices was especially noticeable in December, it amounted to 5.4%, which was the highest in the entire 2005. These are the conclusions reached by experts of the real estate agency “Savva”.

Most of all one-room apartments have risen in price. The growth in prices for such housing reached 41.4%.

First of all, this is due to the high investment attractiveness of one-room apartments: such housing is often bought for subsequent renting.

The growth in prices for two-room and three-room apartments over the past year amounted to 37.3% and 33.1%, respectively.

The main factors that influenced the rise in prices in 2005 were the growth in the well-being of the population and the increased influx of nonresident residents to study and work in Moscow, experts say..

Experts believe that another reason for the shortage of new buildings on the market is the rush demand for housing, since the pace of housing construction lags far behind the existing demand. Experts associate the reduction in supply, first of all, with the untimely enactment of the law on shared construction into force last spring. “The law on shared construction destroyed the usual scheme of construction financing and led to the fact that small companies began to be squeezed out of the market – after all, in accordance with the new provisions of the legislation, it became more difficult for them to attract financing for the construction of facilities. remain unfinished, the number of offers on the primary market is decreasing, “explains Elena Masyutina, Development Director of ScanRealty.

“The law on shared construction has reduced the investment attractiveness of the entire market as a whole,” says Alena Brigadnova, head of the city real estate department at Soho Realty.

The consequence of the massive influx of nonresidents in Moscow was an increase in rental rates for housing. In conditions when the cost of renting an inferior “odnushka” was equal to the monthly payment on a mortgage loan, many thought about moving from tenants to buyers.

Nevertheless, according to the testimony of ScanRealty specialists, mortgage today is not such a mass phenomenon to speak of its significant impact on the purchasing power of the population, despite the fact that the prospect of its rapid development is obvious.

“With the growing competition in this area, commercial banks are gradually lowering rates, but so far not very noticeably – by an average of 2%,” explains Elena Masyutina. “But the trend is growing, and we believe that in 3-4 years Russia will be able to get closer to European standards – 5-6% per annum “.

All these trends have led to the fact that the economy class residential real estate was the leader in price growth in December 2005. Records are beaten by the cost per square meter of a “standard panel”, which grew by 7.62% in December alone, and a so-called panel with a small kitchen (growth – 6.23%). At the end of the year, a fairly even increase in prices could be observed in all categories, except for luxury housing: panel new buildings and “Stalinist” brick houses, in which the growth was noticeably lower and amounted to approximately 23% and 27%, respectively. Analysts believe that the fact of a slight increase in prices for panel new buildings can be explained by the outflow of buyers from the primary housing market to the secondary one, due to the risks of investing money in new buildings..

In December 2005, the volume of residential real estate offers decreased by 10.3%. In total, over the year, the volume of proposals decreased by 40% (by more than 11,500 apartments).

According to ScanRealty, the December reduction in the volume of offers on the market averaged 13.4%, that is, even less. This indicator varies for different categories of real estate and market segments. So, for example, in the category of panel houses in December there was the highest decrease in the volume of supply – 17.6%, but in the category of expensive housing the December supply decreased by only 7-8%.

“As for the indicators for the year, in our opinion, the information provided is somewhat exaggerated,” notes Elena Masyutina. “In the first half of 2005, the real estate market experienced stagnation, a certain stock of objects accumulated, which were subsequently sold. January 2005 the number of offers on the primary market decreased by 20-25%. “

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