Analyst Repchenko named the reason for the wild rise in housing prices

Rising mortgage prices and high inflation provoked panic among real estate buyers

Apartments on the secondary housing market in “old” Moscow have risen in price over the year at the level of official inflation – by 7.6%, to 270,400 rubles. per square meter. In New Moscow, the “square” increased by 3.9% over the year and reached 203,840 rubles, in the region – by 2%, 153,700 rubles. In general, during 2023, prices in the housing market changed unevenly.

In the first six months, the cost per square meter froze – by July it grew by less than a percent. But in mid-summer, the ruble weakened, and investors rushed to buy real estate, saving their ruble savings.

At the end of July, the Central Bank raised the key rate for the first time since February 2022, and active demand grew into a rush. Russians, who two months earlier had calmly observed the situation on the real estate market in the hope of lower prices, got into mortgage bondage. As a result, from July to September the square footage in “Old Moscow” apartments jumped by 4.1%, and in the second half of the year as a whole – by 6.7%.

– The surge in demand was hysterical, buyers “dared” to more or less adequate in terms of the quality-price ratio of the apartment. And by November, the number of offers on the secondary market is sharp,” comments Oleg Repchenko, head of the analytical center “Real Estate Market Indicators”.

Mostly, Russians bought up economy-class apartments in the most affordable areas of the “old” capital. On the territory of New Moscow and the region, the excitement was much less: from July to September, apartment prices increased by 2.7% and 1.6%, respectively.

“There is only enough demand, even “hysterical”, for the market inside the Moscow Ring Road,” continues Oleg Repchenko. – Outside the Moscow Ring Road, housing is purchased by people who are unable to buy an apartment in “old” Moscow.

The real estate that citizens buy outside the Moscow Ring Road can hardly be called dream housing. The bulk of transactions are forced to take place in the segment of small-sized apartments in Soviet-era panel buildings in the far Moscow region. In second place in popularity are “two-room apartments” in modern monolithic brick houses in the Novomoskovsk district.

In November, demand collapsed again. In December, when purchasing activity traditionally increases for psychological reasons (people try to complete important tasks before the end of the year), the situation has not changed. Prices increased by only half a percent, and only in “old” Moscow.

It is obvious that with lending rates of 16-18% per annum, apartment prices in 2024 will slowly but surely creep down. But not in January-February, but in March-April. “By spring, sellers will realize that buyers have left and will understand that it is no longer possible to sell an apartment without a reduction in price,” the analyst concludes.