The Ministry of Construction decided to lower real estate prices in Russia

Mortgage for calculation: officials regulate the price of each “square” of new housing

Officials have taken the mortgage market seriously. Deputy head of the Ministry of Construction Nikita Stasishin said that his department intends to raise the issue of the price per square meter for citizens. We will have to understand the situation together with the Ministry of Finance, the Central Bank, the Federal Antimonopoly Service and other government agencies. The price per square meter in new buildings is rising due to the rush demand for housing from people who want to buy real estate before mortgage rates rise or preferential programs are cancelled. What worries the authorities so much and how this will affect Russians, MK looked into it together with experts.

The “powers that be” are trying collectively to cool the housing lending market. The State Duma has already proposed raising the down payment on preferential mortgages from 20% to 25%. Let us recall that in September the authorities increased this parameter from 15% to 20%, but this, apparently, was not enough. In turn, the rigidity of the Bank of Russia’s approach to this issue may simply become prohibitive. In an information and analytical bulletin, the regulator announced the introduction of a ban on taking out a mortgage if you have a consumer loan, but this is precisely the type of loan that Russians take out in order to pay a down payment.

It is curious that with such attention to the industry from the state, the participants in the real estate market themselves seem to be unwilling to notice the dangers. Thus, according to Roman Rodiontsev, director of the project consulting department at Est-a-Tet, the existence of a “bubble” in the professional environment is questioned. Experts from various companies speak either about the low share of mortgages in the industry relative to global experience, or about the low share of repayment of borrowed funds, which in project models also takes into account the risk factor, the expert emphasized.

However, the Bank of Russia has a different opinion. “In September, our mortgages grew by 4.2% in just one month,” notes the head of the Central Bank, Elvira Nabiullina. — These rates can no longer be called simply signs of overheating of the mortgage market. We see risks here.” This is not just about preferential mortgages. For example, about 289 billion rubles were issued for family mortgages in September, while 286 billion were issued for preferential mortgages. Mortgages are growing at an alarming rate. In September, issuances reached 955 billion rubles compared to 849 billion rubles in August. “Growth 12% per month! – says the head of the analytical department of BKF bank Maxim Osadchiy. — And this is in conditions of weak economic growth. One of the reasons for the acceleration is the huge gap between interest rates on mortgages with state support and the key rate.”

Market representatives also argue with the authorities regarding the issue of inflated cost per square meter. “The presence of preferential products in the primary market did not have a significant impact on the pricing policy of developers,” says Denis Konovalenko, managing partner of Prime Life Development. In modern realities, the cost of new buildings largely depends on the price of building materials, rising costs of labor and logistics, as well as the classic option in the form of the stage of construction readiness of projects, the expert emphasized.

According to the Central Bank, as of October 1, the gap in average prices between the primary and secondary markets is 42%. As Oleg Repchenko, head of the analytical center Real Estate Market Indicators IRN.RU, recalled, before the introduction of preferential mortgages in 2020, the difference was about 10%. Prices in the primary housing market artificially inflated precisely against the background of the protracted program of preferential mortgages: demand for apartments increased, but there was no proportional increase in supply, so prices began to rise. In the secondary market, where there were no preferential programs, the cost of a meter today is much closer to the people, although it is also overpriced.

“An indicator of the overestimation of the cost per square meter in the primary real estate market is the price gap between it and the secondary market, which at the end of the first quarter of 2023 reached 40%: the price in the primary housing market amounted to 127 thousand rubles per square meter, while in the secondary market it was only 91 thousand rubles,” notes Osadchiy. — The reason for this gap: mortgages with state support apply only to the primary housing market. Accordingly, the powerful “lever” of this mortgage only raises prices for primary housing.” Finally, not only the Central Bank, but also the relevant department – the Ministry of Construction – has become concerned about the problem of overheating of the housing market. However, regulating prices in competitive markets creates imbalances, and limiting them can lead to shortages, as recently happened with gasoline. In addition, limiting prices on the real estate market is fraught with a decrease in the quality of housing, the banker warned. As for the real estate market, according to the founder of the real estate agency Development Estate, Anastasia Afanasyeva, as a result of all the transformations, another regulator may appear in the form of a ministry chosen by the authorities, whose decisions will also affect the cost per square meter.

Published in the newspaper “Moskovsky Komsomolets” No. 29149 dated November 2, 2023

Newspaper headline:
Fair square footage