Prices for new buildings in Russia 2023, forecast

Despite the stabilization of demand in the primary market, developers do not yet risk indexing prices for new buildings: their average cost in the largest regional markets of Russia shows a slight decrease in May. The record volume of exposure contributes to slowing down the speed of transactions and maintaining a high share of discounts on the market. Analysts doubt that demand or the cost of new buildings will change significantly in the near future. Although in the medium term we can talk about a nominal increase in average prices, due to an increase in the share of supply in high readiness.

The average cost of primary real estate in the 18 largest regional markets of Russia (16 million-plus cities, Moscow and Leningrad regions) in May amounted to 140.6 thousand rubles. per sq. m, decreasing by 0.2% compared to April. Such data are provided by experts from CIAN.Analytics, explaining that many developers do not yet risk indexing prices. According to the calculations of “Etazhy”, the average cost of new buildings in Russia as a whole is now 119.2 thousand rubles. per sq. m. Over the month, this figure increased by 0.18%, over the year – by 3.64%. Avito Nedvizhimosti analysts estimate the average price of an apartment in new buildings in Russia at 6 million rubles. Over the month, the value decreased by 0.8%, over the year – by 2.9%.

The most pronounced growth the average cost of new buildings, according to CIAN.Analytics, over the past month there has been in Chelyabinsk, where the offer price increased by 1.3% to 84.6 thousand rubles. per sq. m. In Ufa the increase was 0.9%, up to 114.7 thousand rubles. per sq. m. In Krasnodar, according to the estimates of “Etazhy”, the cost of the proposal increased by 1%, to 94 thousand rubles. per sq. m. In Kazan – by 1.4%, up to 142.2 thousand rubles. per sq. m. Simultaneously in Samara average cost, according to CIAN.Analytics, per month decreased by 1.3%, up to 109.5 thousand rubles. per sq. m. In Rostov-on-Don – by 1.7%, up to 120.3 thousand rubles. In Moscow new buildings now cost an average of 319.8 thousand rubles. per sq. m, according to the data of CIAN.Analytics. Over the month, as well as over the year, this figure fell by 0.7%. In St. Petersburg the cost of primary real estate increased by 0.7% over the month, and decreased by 2.3% over the year, to 230.3 thousand rubles. per sq. m.

Demand for primary housing can be considered stable. Alexey Popov, head of CIAN.Analytics, says that in May, after the end of the holidays, the number of targeted actions with ads was 10% higher than in April, roughly corresponding to March figures. The head of the primary direction of “Avito Real Estate” Dmitry Alekseev adds that user activity in the first half of May was 29.4% higher than a year earlier.

The market, according to the specialist, froze: “in recent months, activity either slightly increases, or slightly decreases.”

At the same time, a noticeable imbalance of supply and demand remains: the volume of exposure, according to Avito Nedvizhimost, is 52% higher than last year. “There are a lot more objects than there are buyers for them,” Mr. Alekseev notes.

Alexey Popov also speaks about the record volume of supply: “In the Moscow region, 117 thousand apartments and apartments are available to buyers, more (131 thousand lots) were only in the middle of 2015.” He estimates the total volume of exposure in the 18 largest regional markets at 313,000 lots, which is 1% less than in April. “The indicator is stabilizing a bit,” the expert notes. A large selection, according to Sergey Zaitsev, Sales Director of Floors, contributes to a decrease in the speed of the transaction: “Potential buyers consider a significantly larger number of objects before making a decision.”

Against this background, a significant share of the supply continues to be exhibited at discounts. In Moscow and the Moscow region, such lots now account for more than 30% of the supply, says Mr. Popov, naming discounts as one of the key sales drivers. “But one must keep in mind that in a number of cases the “crossed out” price includes figures that have never figured as real price levels, no deals were made on them,” he notes. Dmitry Alekseev says that in Moscow, 66% of apartments are now included in the promotional programs of developers, in St. Petersburg – 59%. This conjuncture, according to Sergei Zaitsev, is unlikely to change in the near future.

“The market is now very flexible: developers are often ready to offer special conditions for a specific client, depending on the speed of entering a deal, the format of payments and the buyer’s requests,” says Mr. Zaitsev.

Dmitry Alekseev doubts that the cost of apartments will change significantly in the near future. In the medium term, according to Alexey Popov, the average nominal offer prices may grow by 5–7% due to a gradual increase in the share of buildings at high stages of completion in the supply structure. The expert also expects the pace of sales to remain at the level of January-April. “Acceleration is unlikely: in addition to the seasonal factor, part of the demand will “leave”, reorient itself to secondary and suburban real estate,” he says. According to Mr. Zaitsev, the market is still holding back from lowering prices.

Alexandra Mertsalova