Apartment purchases froze at the doorstep – Newspaper Kommersant No. 235 (7436) dated 12/17/2022

The traditionally stable demand for real estate in the Moscow region this year was far from realised. Analysts at Oro estimate that 23% of potential homebuyers this fall have abandoned deals or postponed acquisitions. The share of failed transactions exceeded that recorded at the height of the pandemic in 2020 (20%). And this is despite the fact that the proportion of citizens who consider investing in real estate the best means of saving is growing.

This fall, 23% of residents of the Moscow region who were planning to buy an apartment changed their mind: 12% postponed the deal indefinitely, and 11% refused to purchase. These are the results of a survey by research company Oro (formerly Kantar in Russia). According to analysts, Russians have become more pessimistic about the future and timing of economic recovery. In 2020, due to the pandemic, 20% of respondents changed their decision to buy a home. Tatyana Burlakovskaya, general director of the Golden Brown Group real estate agency, notes that for many, partial mobilization has become an excuse to postpone major purchases until better times, especially when it comes to loans.

Pessimistic moods are confirmed by the dynamics of transactions in the real estate markets. According to Rosreestr, 6.02 thousand equity participation agreements (DDUs) were registered in Moscow in November, which is 36% less than a year earlier. The number of registered sale and purchase agreements (which reflect the dynamics of transactions in the secondary market) decreased by 22.5% in October to 11.5 thousand year-on-year.

Oro associates dynamics with consumer sentiment. Thus, 62% of Oro respondents planning to purchase a home during the year are concerned about the current economic situation. Since April, their share has increased by 4 percentage points. 51% of the surveyed buyers are worried about the future compared to 42% in April, and 33% of such respondents already allow themselves less than before. In addition, 11% of potential property buyers, according to Oro, thought about moving to another country in the fall. Since spring, the figure has risen by 4 percentage points. The emotional state of buyers is of great importance in the real estate market, and now many are in a state of anxiety and discomfort, says Key Capital Development Director Evelina Ishmetova. “Since February, we have been facing a sad, anxious, lonely, tired person who is forced to save money,” she states. According to Ms. Ishmetova, the consumer strategy is becoming more chaotic: the number of long negotiations has increased, which do not always lead to a deal.

The “panic phase” with the desire to “save” the cheapening money from consumers has passed, another reason for the reduction in the number of transactions is the executive director of the Russian Auction House, Konstantin Raev. Many buyers refuse transactions, counting on lower prices from developers, Ms. Burlakovskaya points out. According to Oro, in the fall, 24% of respondents expected a decrease in property prices, and 43% expected an increase in supply. Since April, these shares have risen by 10 and 8 percentage points, respectively.

At the same time, citizens continue to consider investment in real estate as one of the main means of savings. The share of residents of the Moscow region who consider investing in real estate the best way to use their savings has increased from 29% to 32% since April, Oro said in a study. The share of respondents considering opening a ruble deposit decreased from 33% to 24%, those who are ready to invest in the stock market – from 12% to 10%, in the purchase of foreign currency – from 8% to 6%. The choice of real estate to save savings was facilitated by low deposit rates in the summer and autumn after the spring jump, the unavailability of the currency, negative news about the stock market and poor understanding of it, Oro notes.

According to Oro analysts, consumers who managed to buy apartments this year are more positive about the prospects for economic recovery, and taking into account investment interest, demand in the category may recover. Although real estate market participants are more skeptical. Tatyana Burlakovskaya believes that only economic stability can increase demand. “We need the prospect of stabilization, even if the new conditions are much worse than the previous ones,” agrees Mr. Raev.

Alexandra Mertsalova