Property prices will fall if demand is not stimulated

Now Russians taking out mortgages pay banks the cost of several apartments

Russians who took out a mortgage without preferential programs this year at 16-19% per annum will overpay the banks for the cost of housing by three or even four times. Experts from RIA Real Estate came to these conclusions in their study. Current loan rates make any mortgage unprofitable for the borrower.

The tightening of lending conditions has hit the new buildings segment quite hard. Thus, in January 2024, 75.9 thousand mortgages were issued in Russia – this is immediately 2.5 times less than in December. The increase in the key rate of the Central Bank of the Russian Federation has led to the fact that today banks are issuing preferential mortgages at 16-19% per annum. In fact, if a citizen takes out a 20-year mortgage at 18% on a one-room apartment worth 8.3 million rubles in a new building, then in total he will pay the bank 18 million rubles in interest for his purchase, that is, almost three times the actual cost of his apartment. And if he takes out a housing loan for 30 years, then, if he pays strictly according to the schedule, he will overpay for housing an amount four times more than its original cost.

“With such high interest rates, there will not be too many people willing to take out a mortgage, but there will certainly be people with official salaries above 100 thousand rubles per month who need a separate apartment,” says Freedom Finance Global leading analyst Natalya Milchakova. — For example, if a fairly wealthy young family wants to get their own home. Perhaps the breadwinner of the family or a husband and wife together can take out a mortgage even under such conditions.” In order not to incur large expenses for servicing a mortgage, it is better to either set aside your own funds to purchase a home (if, of course, your income allows it) or rent a home, the analyst suggested.

“Currently, the share of apartment purchases using mortgages on market conditions does not exceed 3-4% of the total loan portfolio, and this indicates the actual inaccessibility of such programs for the population,” Rustam, director of mortgage sales and implementation of financial instruments at A101 Group of Companies, continues the conversation. Azizov. Now, if a potential borrower does not fall under any of the mortgage programs with state support, he, in fact, has several basic options for action. Firstly, you can buy an apartment now, while prices have stabilized, and pay high interest for some time, and then, when the Central Bank lowers the key rate, refinance the loan. The second option is to wait until rates on market programs drop to at least 12-13%, the expert advised.

But, as it turns out, there are also unusual solutions on the market related to those who already have a preferential mortgage. According to the founder of the management company Smarent, Viktor Zubik, you can turn to the assignment market. “Some banks issue family or IT mortgages for transfer transactions: you can find a new building with “keys” this year, buy housing there from an individual, and not from a developer, and get a preferential mortgage,” he explained.

In addition, with current high rates, people can take out a mortgage today for short-term refinancing. “For example, if a person wants to “close” a deal with money from the sale of another apartment, but there is no buyer yet. In order not to miss the option he likes, he may well take out a mortgage at a high interest rate for several months, which he will cover in a short time with money from the sale of his home, explained Oleg Repchenko, head of the Analytical Center “Real Estate Market Indicators”. “Another option is when there is a large down payment, almost the entire amount needed for the purchase, but a little short.” And those who can wait should do so better, the expert advises: with a high degree of probability, the cost of housing will decline in the medium term, at least in the secondary market. The rate of price growth is slowing down, the cost per square meter on the secondary market is already marking time: in January-February, price dynamics do not go beyond the statistical error.

Repchenko is confident that the importance of cheap mortgages is overestimated. It is not low loan rates that make housing more affordable for people, but an acceptable cost per square meter. And over the past 3-4 years, housing prices throughout Russia have approximately doubled. In order for the price “bubble” in the housing market to dissolve and apartments to become more affordable for buyers, including mortgages, the state does not need to do anything to support demand: the market will regulate everything itself. Insufficient sales volumes will force both developers and private sellers to lower the price tag and demand will return, the analyst is sure.