Construction surplus – Newspaper Kommersant No. 63 (7508) dated 04/12/2023

“Certain imbalances are also beginning to appear in the real estate market: the so-called overstocking is taking place,” Vladimir Putin said on April 11. According to the president, the risks that have arisen should be reduced, in particular, by supporting the demand for housing, which, due to the crisis, cannot recover for almost a year. Thus, according to Dataflat.ru estimates, in March in Moscow and the Moscow region, transactions were reduced by 34% year-on-year, in St. Petersburg and the Leningrad region – by 50%.

This recession overtook the market immediately after a long period of its stimulation through preferential mortgage programs and turned into an increase in the share of unrealized supply for developers. Thus, according to the data of the unified information system “Nash.Dom.RF”, 44% of the current volume of construction in Moscow remains unsold, in April last year the figure was estimated at 34%. CIAN notes that developers cannot sell 11.8 million square meters. m of housing and the implementation of all this volume may take more than three years. But on the condition that no new proposal enters the market.

The protracted decline in market demand is not the only problem for developers. In supporting the market, the role of existing social programs is gradually weakening. Thus, according to Rosstat estimates, at the end of last year, 49.7% of the total number of Russians who wished to dispose of this money sent maternity funds to improve housing conditions in the country. Relative to 2021, the indicator decreased immediately by 8.2 percentage points. In Moscow, we are talking about a fall of 9.4 percentage points, to 24.1%.

There is nothing surprising in such dynamics: the average cost of housing in the primary market of Moscow in March, according to Cyan.Analytics, amounted to 316.1 thousand rubles. for 1 sq. m. The mother’s capital for the first child (587 thousand rubles) is enough to buy 1.86 sq. m. m. So this mechanism remains relevant only in regions with a low market value of housing, which are traditionally outside the perimeter of interest of system builders.

As a result, the configuration in the housing construction market turned out to be difficult. The potential of the most obvious support measures, for example, a sharp decrease in mortgage rates, has already exhausted itself during the pandemic, ending with a jump in prices, the role of social benefits is declining, and the pace of construction and sales must be maintained. The most banal method of support here may be the purchase of unsold housing for renovation programs, renovation and resettlement of the housing stock. But whether the developers will be satisfied with the price and whether the authorities will be able to digest the surplus existing on the market is a big question.