In 2024, minimal growth in prices for new buildings is expected
According to the results of 2023, prices for new buildings in Russia increased by 10%, and this year the price growth will be minimal, according to data from the analytical center DOM.RF.
“The situation in the real estate market by the beginning of the year was influenced by several factors: the widespread use of preferential mortgage programs, a high inflation rate, and an economic downturn against the backdrop of the Special Period of Time. High inflation rates and the depreciation of the ruble forced the Central Bank to raise the key rate to a prohibitive 16%. Market participants perceived such a rate as too high, so many took a wait-and-see position,” said Vasily Minaev, an expert on income real estate, to “GORUS”.
Given that preferential programs have been significantly reduced—both in terms of amount and the number of mortgages “in one hand,” and the down payment has tripled since the beginning of 2023 (up to 30%), demand for new buildings, supported by such a mortgage, has sharply declined. And now the market will gradually return to normal.
According to the expert, this is characterized by balancing the cost of new buildings and secondary housing, as well as possible adjustments to real estate prices.
“As for the forecast for 2024, of course, we are unlikely to see a decrease in nominal real estate prices. Developers, banks, and the entire industry are interested in prices rising or at least not falling. It is important to distinguish between investments and purchases with the goal of solving housing issues. If real estate is needed for living, then in 2024, it is easier to find good deals in the secondary real estate market since prices there have risen more slowly, and high mortgage rates have significantly reduced demand,” recommends Vasily Minaev.
According to the expert, investment purchases of new buildings in 2024 are a risky decision since there are no strong drivers for continued price growth.
“The extension of the family mortgage in its new form will not have a significant impact on the market. An investment purchase of a new building can be justified as a medium- or long-term investment, provided that the buyer uses mortgage programs, bank promotions, and developer offers wisely,” noted Vasily Minaev.
Photo: Sergei Fadeichev / TASS