The decline in sales in St. Petersburg and the Leningrad region is associated with a sharp increase in housing prices – they grew there faster than the average in Russia. According to Rosstat, by the third quarter of 2021, prices in the primary housing market in St. Petersburg increased by 33%, to 170.7 thousand rubles. for 1 sq. m, in the Leningrad region – by 37%, up to 109 thousand rubles. On average across the country during the same time, apartments in new buildings have risen in price by 23% (up to 93.5 thousand rubles per 1 sq. m), and in Moscow – by 27% (up to 289 thousand rubles). Official data on price growth for the fourth quarter has not yet been published.
How have mortgage programs changed?
Since April 2020, a mortgage program has been operating in Russia with a subsidized rate of 6.5%. In Moscow, the Moscow region, St. Petersburg and the Leningrad region, it was possible to take a loan of up to 12 million rubles. under this program, in other regions – up to 6 million rubles. From July 1, 2021, the rate under the program was increased to 7%, and the credit limit for all regions is limited to 3 million rubles. Thus, for Moscow, St. Petersburg and some other large cities with high housing prices, the program almost stopped working. At the same time, the government expanded the preferential family mortgage program: now take out a loan on it with a limit of up to 6-12 million rubles. families with one child born since 2018 can.
After changing the subsidized mortgage program in the second half of 2021, sales were down 1.8% compared to the same period in 2020. But in comparison with the first half of 2021, they, on the contrary, increased by 13%.
Rising prices have affected demand, admits the head of the consulting center “Petersburg real estate” (part of the Setl Group – the third largest developer in Russia) Olga Trosheva. But taking into account the actual cancellation of the preferential mortgage program for St. Petersburg from the second half of 2021, the volume of demand decreased slightly, she notes. According to Rosreestr, in the second half of 2021, only two share participation agreements were concluded in St. Petersburg less than in the first. But compared to the same period in 2020, demand decreased by 18%. Continued inflation may support demand because for many Russians, buying an apartment is the most understandable and reliable way to save money, Trosheva adds.
Russians began to actively take out mortgages in anticipation of a new increase in rates
The second factor in the decline in demand in St. Petersburg is the reduction in the volume of new supply in the city, says Cyan.Analytics expert Victoria Kiryukhina. In 2019, it was possible to buy 6.4 million square meters there. m in new projects, in 2020 – 3.5 million sq. m, and in 2021 – 3 million. This may be due to the fact that Smolny and the Ministry of Construction signed an agreement to limit the volume of annual housing commissioning in order to reduce the burden on urban infrastructure, the expert admits.
If we consider other regions where new houses are being actively built and where at least 10,000 share participation agreements are concluded annually, then the fall in sales over the past year also occurred in Tatarstan. In 2021, 20.2 thousand apartments and premises in new buildings were sold in the republic, which is 4.5% less than in 2020. Although compared to the pre-pandemic 2019, an increase of 11% was recorded. In the Altai Territory, sales decreased by 14%, in Perm — by 4.4%. The main reason for this Kiryukhina also calls the rise in prices. “In addition, for example, Tatarstan is in the top five in terms of transactions in the secondary market in Russia. That is, demand is shifted in favor of ready-made housing,” she says.
RBC sent inquiries to the governments of St. Petersburg, the Leningrad Region, Tatarstan, the Altai and Perm Territories, the Ministry of Construction and the state company Dom.RF, which is developing the housing market in Russia.
Where sales have grown
Among the regions in which more than 10 thousand apartments or other premises in new buildings were sold last year, Primorsky Krai is the leader in terms of growth rates. There, in 2021, 10.4 thousand equity participation agreements were concluded – 55.5% more than a year earlier, and more than twice as many as in pre-pandemic 2019.
High demand is associated with preferential Far Eastern mortgages, as well as a shortage of projects in the region, which is why federal players are coming to Primorye, says Wainbridge CFO Andrey Bezverkhy. In addition, the region attracts developers with tax breaks, he adds: “However, the main reason is the underdevelopment of the real estate market and the low competitive environment. In a relatively rich region with high potential demand, there is simply no high-quality comfort and business class product, despite the fact that the demand for it is very high.” The interlocutor of RBC announces that in the next 10-15 years we can expect continued development of the construction industry, transport and road network and economic growth in Vladivostok and in general in the Primorsky Territory.
The Krasnodar Territory and neighboring Stavropol Territory also showed high demand growth rates last year, where sales increased by 51% and 52%, respectively. The regions differ greatly in the number of equity participation agreements: in the Stavropol Territory, 13.4 thousand apartments and premises in new buildings were sold, and in the Krasnodar Territory – 70.7 thousand. Kuban ranks third in sales in new buildings after Moscow and the Moscow Region. Demand for housing in the southern regions began to grow with the onset of the pandemic. When entry to foreign resorts was restricted due to COVID-19, the number of tourists on the Black Sea coast increased, and with it, housing sales. There is traditionally a large number of transactions in the secondary market, but sales in new buildings are also growing. For example, in Sochi, the number of purchases in new buildings increased by 10% and they accounted for 38% of the total number of transactions on the market, says Yulia Galimova, general director of the Sochi-based company Nedvex.
Another region with high growth rates of sales in new buildings is the Ryazan region, where they increased by 53% over the year, to 16.2 thousand. But the main growth occurred in the first half of the year. Yury Yurov, general director of the development company Marmax, links the booming growth in Ryazan with proximity to Moscow. “Residents of the capital are buying local real estate as an investment, especially since a high-quality business-class offer and preferential mortgages have appeared,” he says, pointing out that the bulk of buyers are local residents.
In Russia, the number of regions where new buildings are not sold at all has increased
In general, last year at least one apartment or premises in a new building was sold in 80 out of 85 Russian regions. Including three equity participation agreements were concluded in the Magadan region in the fourth quarter of 2021; before that, not a single apartment in a new building had been sold in this region since at least 2016. The Chukotka and Nenets Autonomous Okrugs, the Jewish Autonomous Region, the Murmansk Region, the Kamchatka Territory and the Republic of Tyva remain without such agreements. In Karachay-Cherkessia, one deal was concluded in 2020, and none last year.