Financial Advisor Oleg Suhov — how would react the real estate market on the decline in rates on Bank loans
While the real estate market predicting the relative stabilization and recovery due to the decrease in the key rate of the Central Bank to 10%, we tried to analyze what had happened in the last two years, when the market struggled with the impact of low oil prices, the current regime of anti-Russian sanctions and the endless currency fluctuations.
Intensive growth of the dollar against the ruble was observed throughout 2014, but peaked in the last quarter. In total that year the American currency has moved up by 10 positions — from 33.3 to 43.3 ruble exchange rate. The effects of the devaluation has provoked a wave of price fluctuations on real estate. According to analysts of the Institute of tax management and real estate Economics higher school of Economics, in October the average price of housing fell by 4% in dollar terms and amounted to $4.5 thousand per square meter. In rubles the write-down was imperceptible, price in 194,85 thousand rubles per 1 sq. m remained at the level of the beginning of the year.
The depreciation of the national currency and changes in the banking sector led to a consumption boom in the market — the desire of the Russians to keep their savings often focused on one of the most reliable ways of investment — the purchase of real estate. The downturn in the Russian economy in the first place played into the hands of the holders of currency and Bank deposits. Many foreign exchange investors, is still not having the ability to improve their living conditions, after a few months of the crisis became owners of apartments.
Thus, by the end of the year the number of property transactions in Moscow increased sales volumes of apartments to be built went up sharply — according to the data of Rosreestr, in 2014 the capital was reached more than 24 thousand contracts equity, which is 13% higher than the previous year. At that time the market was literally perenasytil, and then demand began to fall. Meanwhile, the ruble continued to depreciate and is rapidly losing in price and apartments.
Muscovites have started to buy property, because the amount, for example, a $100 thousand, which previously was not even considered for the acquisition of more or less liquid residential facility, is now a pretty decent accumulation to buy an apartment even within the ring road. In the price range of 5 million rubles, two years ago it was possible to find a Studio apartment on the outskirts of Moscow standard footage from 33 to 42 sq m, within walking distance from the metro.
If we analyze other market segments, for example, the rent, including luxury, housing gradually began to lose value. But here the landlords tried to compensate for lost profits, setting a price tag in dollars. However, instead of a classy apartment in the heart of the capital experienced the potential tenants are increasingly preferred cheaper apartments. Housing business class depreciated on the eyes.
2015 marked a real stagnation in the Moscow real estate market. On low buying activity indicated was not only a small percentage of transactions, but a significant decline in consumer interest as such. The main stream of those wishing to purchase housing went into decline. Decreased and the solvency of the population. The sellers were forced to sell items with significant discounts — the value of such transactions amounted to approximately 80%.
According to various estimates, during the first 9 months of 2015, the cost of supply in Moscow secondary housing market has dropped 1.5%. In the end, by October, the Federal registration service recorded a decrease in the volume of transactions in residential real estate to low of 38.7% compared to the same period last year. At this point, the dollar rose by a quarter and, according to the Bank, on October 1, 2015 was $ 65.7 ruble. However, there was a decline in the value of residential property, showing the dollar discount of about 35% comparing with the previous year. The average price of 1 sq m of real estate was $3,046 thousand However in rubles the prices have not decreased, but just the opposite — stabilized and even began to return to pre-crisis levels.
Today, the market continues to dictate trends on the low-budget. The crisis still affects demand and purchasing power of potential buyers of apartments. Real estate prices continue to grow, but a growing demand for small-sized housing “odnushki” the area and small Studio apartments up to 30 squares.
Accordingly, the range of the price scale slightly off — limit in $100 thousand now, as in 2015, is estimated at nearly 6.5 million rubles. Under this segment you can get a Studio apartment with small square footage up to 35 sq. m, in the North of Moscow in a block of high-rise building, a 20-minute drive from the metro. Can be considered and “kopeck piece” in need of major repairs — for example, in textile workers or in Zelenograd, ranging from 43 to 52 sq. m.
However, according to the laws of the market in the near future, the industry should respond to the imminent reduction in interest rates on Bank loans, which in turn, along with the decline in inflation and strengthening of the ruble will lead to increased demand for mortgages and therefore on housing. Accordingly, real estate prices may consolidate for some time to take positions.
The author is President of the Guild of lawyers real estate market
The opinion of the author may not coincide with the position of the editorial Board