Prices have increased on the secondary real estate market
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The realization of pent-up demand, fears of worsening conditions on mortgage loans and the desire to invest in real estate contributed to an increase in prices for secondary housing. In the third quarter, the average cost of 1 sq. m in Russia increased by 8%, the average lot – by 13% year-on-year, and the most pronounced dynamics were observed in the regions. Analysts consider the trend to be short-term, expecting that prices will begin to decline at the beginning of 2024 due to reduced demand.
According to the results of the third quarter, the average cost of secondary real estate in Russia increased by 8% year-on-year, to 92 thousand rubles. for 1 sq. m, the cost of the average lot increased by 13%, to 4.5 million rubles. Such calculations are provided by Avito Real Estate. At the end of September, Etazhi analysts estimated the average cost of secondary housing in Russia at 116 thousand rubles. for 1 sq. m, 7.7% higher than a year earlier. According to Cian.Analytics, prices in the 18 largest regional markets increased over the year by 7.5%, to 132.3 thousand rubles. for 1 sq. m.
The head of the city real estate department of NDV Supermarket Real Estate, Elena Mishchenko, associates the rise in prices with the realization of pent-up demand due to a decrease in tension in society. According to her, demand is often concentrated on the most budget-friendly offers. Director of the Est-a-Tet resale real estate sales office, Yulia Dymova, adds that the growth in sales was also facilitated by fears of rising mortgage lending prices that appeared in the third quarter following an increase in the key rate: buyers were in a hurry to enter into a deal on approved terms. According to Avito Real Estate, demand for secondary housing in Russia in the third quarter exceeded last year’s level by 15%, the total volume of exposure decreased by 1%.
The head of Tsian.Analytics, Alexey Popov, adds that real and nominal incomes of Russians have increased by 6–13%, respectively, and investing in real estate for many remains the preferred option for saving savings. A year earlier, the expert notes, buyer interest was more concentrated on new buildings due to the “zero mortgage” from developers; now the situation is more balanced. Although the annual increase in prices on the primary market turned out to be more pronounced – by 14.6%, to 155.7 thousand rubles. for 1 sq. m on average for the Russian Federation, follows from the data of the portal “Our.Home.RF”. In the primary market, demand is also supported by preferential programs, Ms. Mishchenko believes.
The most pronounced dynamics are in Chelyabinsk, where prices increased by an average of 25%, to 74 thousand rubles. for 1 sq. m. This is apparently explained by a 14% reduction in supply in the third quarter, while demand grew by 25% year-on-year. A similar trend is observed in Kirov, where secondary housing on average increased by 20% per year, to 78 thousand rubles. for 1 sq. m.
In Moscow, the average cost of 1 sq. m on the secondary market over the year increased by 2%, to 273 thousand rubles, and the price of the average lot – by 11%, to 15.3 million rubles. In St. Petersburg, the first indicator decreased by 2%, to 181 thousand rubles. for 1 sq. m, and the second remained at the level of 8.5 million rubles. Sergei Shloma, director of the secondary market department of the Inkom-Real Estate company, believes that sellers in Moscow are not trying to raise prices, considering the high demand in the secondary market to be more of a short-term phenomenon, wanting to have time to conclude deals.
The head of the secondary and suburban areas of Avito Real Estate, Sergei Khakhulin, also considers the revival to be short-lived. “Due to rising mortgage rates in the fourth quarter, interest in older stock will be limited, which will hold back prices and help fill exposure,” he predicts. Mr. Shloma points out that the Central Bank’s rhetoric boils down to the fact that the high rate will remain for at least a year. “This will undoubtedly reduce prices – the pressure on them will be serious,” he is sure. The expert expects a reduction in prices in the second half of 2024. Alexey Popov notes that reducing prices is a slow process. First, the activity of buyers should decrease, then the practice of providing discounts should become more frequent, and after that nominal supply prices may begin to be adjusted downwards, the expert explains.
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