Housing prices at the excavation stage are approaching prices for finished housing

High demand for new buildings in Moscow last year allowed developers to sell housing at the foundation pit stage at prices close to the cost of almost completed apartments. As a result, the gap in the cost of new buildings, which will be built for at least another two years, and properties ready for occupancy, has reached its lowest level in the last five years – 15.9%. However, market participants expect that due to cooling demand at the beginning of the year, the price gap will begin to widen again.

In the first quarter of 2024, the difference between housing prices in new buildings at the foundation pit stage and apartments in newly built buildings within the old boundaries of Moscow decreased to 15.9%, or to 449.1 thousand and 534.1 thousand rubles. for 1 sq. m accordingly, calculated in Metrium. This is the minimum value over the past five years, analysts said. Thus, in the first quarter of 2023 the difference reached 32.3%, in January-March 2022 – 25.1%, for the same period in 2021 – 28.5%, 2020 – 30.5%, 2019 – 35 .3%.

Analysts recorded the smallest price gap in new buildings in the mass segment.

According to Metrium’s calculations, such housing on a foundation pit now costs 5.3% less than ready-made housing (323.1 thousand and 341.2 thousand rubles per 1 sq. m, respectively). A year earlier, the price difference was 20.3%. New business class buildings are now cheaper on the ground by 9.7% (421.4 thousand rubles per 1 sq. m), premium class – by 8.8% (717.1 thousand rubles), elite segment – by 20.4% (RUB 1.52 million).

The narrowing gap between the prices of properties under construction and those already commissioned is explained by an increase in prices on the primary market in the second half of 2023, explains Ruslan Syrtsov, managing partner of Metrium. Then, according to him, the cost increased ahead of inflation due to a noticeable increase in the Central Bank’s key rate and the expectation of the winding down of state programs on preferential mortgages. According to Dataflat.ru, in February 2024 in Moscow the average cost of 1 sq. m turned out to be 35% more year on year. By the beginning of 2024 in Moscow, most new buildings on the foundation pit were sold without a discount, but now prices are stagnating following a decrease in demand, adds Mr. Syrtsov.

Finished new buildings in Moscow now account for only 10.6% of the total supply on the primary market, notes Optima Development commercial director Dmitry Golev. The record sales observed last year have led to the fact that by now, mostly low-market apartments with poor layouts remain unsold in almost finished houses, adds Kirill Kholopik, head of the ERZ.RF portal. By the end of construction, small-cut lots, which have the greatest investment attractiveness, are washed out, agrees Stanislav Sagiryan, General Director of RKS Development Group of Companies.

With the transition to project financing, developers have no motivation to sell housing at a significant discount at an early stage of construction, adds Dmitry Golev.

Before the introduction of escrow accounts, a significant difference in prices was caused by risks for the buyer, which are now leveled, agrees Vladislav Preobrazhensky, executive director of the Moscow Investors Club.

At the same time, buyers increasingly prefer constructed housing, notes Mr. Golev. But investors, who predominantly chose new buildings at the foundation pit stage, could reorient themselves to banking products, says the general director of Ricci | Residential real estate” Ekaterina Lomteva.

She expects that due to the reduction in new volume in the mass housing segment, the average price for a foundation pit will approach the prices for finished new buildings, but the gap will still remain. Kirill Kholopik, on the contrary, predicts that the gap will widen as the sales rate in 2024 has fallen. In February 2024, sales volume in Moscow new buildings decreased by 1% year-on-year, to 213 thousand sq. m. m, as specified in Dataflat.ru.

Daria Andrianova