In 2024, apartment prices will collapse due to secret discounts

In 2024, experts expect the development of several bright trends in the housing market that emerged in 2023. Among them is an increase to 10-15% of exchange transactions, which buyers will be forced to resort to in order to solve their housing problem in conditions of high mortgage rates. And, of course, discounts on apartments – both in new buildings and on the secondary market.

“In the new year, we do not expect a sharp reduction in key rates, and, consequently, in mortgage rates,” says Tatyana Podkidysheva, executive director of the NDV Supermarket Real Estate company. – Based on the forecasts of the Central Bank, it will be gradual. During 2024, the key rate will be reduced to 12.5-14.5%, and mortgage rates will remain at 14-15%, which will become a barrier to purchasing an apartment for many consumers.

The second factor determining the development of the primary market in 2024 is the winding down of preferential mortgages. Back in 2023, the down payment for subsidized programs was increased to 30%, and the maximum loan size in Moscow and St. Petersburg, the largest real estate markets, was halved, from 12 million rubles to six.

The increase in down payment in itself did not reduce demand, since buyers understood what was going on. Already at the end of 2023, the average size of the first payment was 32-34%, continues Tatyana Podkidysheva: “It is a combination of factors that has a negative impact on demand – along with the increase in minimum rates, it is necessary to take into account the application of allowances to risk coefficients for mortgages with a low down payment and for borrowed buyers. All this makes preferential mortgages available only to a limited number of consumers.”

However, according to the expert, there is no need to expect a reduction in prices for new buildings. In the first six months of 2024, apartment prices will either remain the same or increase due to a possible housing shortage associated with the postponement of the launch of a number of development projects.

In the second half of the year, the price situation may change for the better due to easing monetary policy. Then the cost of primary real estate will “freeze” or, at least, will grow at a lower rate than last year.

The secondary market is expected to be quiet at the beginning of 2024. Demand will resume by mid-spring.

– According to our forecasts, in March-April prices will begin to decline, and some owners may begin to actively offer a discount, even at the time of publication of advertisements. However, at the beginning of the new year, no price changes are expected: usually sellers need several months to understand the situation on the market, says Tatyana Podkidysheva.

The second trend is most relevant for Moscow consumers. Those planning to buy an apartment in the capital will reduce the requirements for lots and consider less prestigious locations, houses with an older year of construction, apartments with an unfavorable view from the window, etc., in order to meet the planned budget. Those who cannot meet the “metropolitan” budget, even if expectations are lowered, will more actively consider the Moscow region as a location for purchase.

– In the suburban real estate market, we expect the trend towards constant growth in demand to continue. This trend emerged during the pandemic, when many more buyers began to consider options for purchasing dachas and houses for permanent residence. According to our forecasts, the demand for suburban real estate will increase by 7-10%, says Tatyana Podkidysheva.

Supply will increase in direct proportion. A large number of settlements are appearing in the Moscow region, and houses are being built quickly. The increase in volumes will be especially noticeable in the spring and summer. Prices may also rise. Back in 2023, due to rising prices for building materials, the cost of houses increased by an average of 15%, and in some cases there was an increase of 20%.

Managing partner of bnMAP.pro, founder of BEST-Novostroy, Irina Dobrokhotova, calls the number one trend in the coming year the tightening of preferential mortgage conditions, which is already observed. Since March, an increase in premiums on risk coefficients that the bank must take into account when issuing a loan has already been announced. The higher the risk, the greater the reserve of additional capital the bank must have to approve loans, which makes them less profitable for financial institutions:

– The government says that from July preferential mortgages in their current form will no longer exist, but will become as targeted as possible and will be provided in selected territories. This will lead to the fact that preferential mortgages will become unaffordable for a significant part of the population. This means that developers will look for other options to maintain demand, and buyers will rush to take out a home loan while they can. This will lead to a more careful and balanced launch of new pools of apartments for sale, so that overstocking does not occur.

Import substitution will continue in construction and related industries; manufacturers will look for opportunities to produce construction and finishing materials in Russia. The same applies to the production of elevators and some complex technological systems for buildings.

The head of the Apriori Real Estate agency, Valeria Kozlova, says that few developers are ready to reduce prices even with a sharp decline in demand. One-time promotions are possible – with real discounts, in order, among other things, to fulfill obligations to banks on escrow accounts, but no more.

Developers are ready not to sell and wait, just not to reduce prices. “The market has a margin of safety,” states Valeria Kozlova.

The fact is that in 2024 the key rate may first increase and then return to 14–15%. In 2025, according to the Central Bank’s forecasts, the key rate should drop to 7-9%. “It is precisely this financial model, based on the assumptions of the Central Bank, that developers include in their sales plans,” comments the head of the agency.

A surge not only in demand, but also in purchasing activity itself will occur in April. The excitement will be artificial, largely fueled by discussions about the abolition of preferential mortgages. The fears of people for whom buying a home is important not from an investment point of view, but to solve a pressing housing problem, will fuel prices to the delight of developers. Although there is no talk of a strong rise in price.

Experts believe that a lot of housing that investors bought a year or two, or even a few months ago, will “fall out” onto the market. Formally it is secondary, in fact it is primary. However, such apartments will not be popular with buyers, since they are most often without renovation, not to mention equipment and furniture. Buyers will look for ready-made options on the real secondary market.