Due to the introduction of the next package of anti-Russian sanctions from the United States our national currency and stock markets are shaking for several days. The sharp UPS and downs quotes are contradictory forecasts of experts. Russians panic and don’t know where to go — whether to change money in the first exchanger, or to grab any apartment in the nearest real estate Agency. SP asked the experts, how will the new financial situation in the housing market in the short and medium term.
— In the short term sharp price fluctuations on the real estate market is not expected, — said the managing partner of OOO “Vektorstroyfinans” Andrew Kolacinski. — With regard to consumer demand, the weakening of the national currency may lead to an increase in the number of investment transactions. This scenario is not again repeated, and if within a few months the ruble will continue to lose ground against the dollar and the Euro, private investors will return to the market. However, excessive demand in the mass housing market is not, as the number of paying customers is very limited. Currency fluctuations affect the solvency of the population. Now there are all prerequisites to accelerate the pace of inflationary growth. Also, because of sanctions, some companies may be cutting jobs and wages. In addition, the negative consequences of the sanctions can become an obstacle for further reduction in the key rate of the Central Bank, which certainly affect the availability of mortgages. Thus, the number of buyers acquiring property for their own use, may be reduced.
“SP”: — How long will the real estate market to get out of this course pits?
— The real estate market, — says the managing partner of the company “Metrium”, a member of the affiliate network of CBRE, Maria Litinetskaya, can get in the “exchange hole”, if a currency quote soon stabiliziruemost. First, the real estate and construction is a very noble industry, which are always later than other sectors of the economy react to changing market conditions. Second, currency fluctuations do not have a deep macroeconomic reasons. In particular, the price of oil also has updated a four-year high, reaching $ 73 per barrel. So, I guess, before the real estate market can react to changes, the ruble or restore their former positions, or stabiliziruemost new, but not so extreme frontiers.
We can never tell, — says the Director of the Department of the secondary market company “INKOM-real Estate” Michael Kulikov — the real estate market is in course, as in any other of the pit. Moreover, we are forecasting year-end growth in the number of transactions by 50% without reference to foreign exchange jumps.
“SP”: — How developers have to change their policy?
In light of recent events it is likely that the Central Bank will increase the value of the key rate — suggests Andrew Kolacinski that will entail increase in the cost of credit resources for developers. In such a situation they will have to include additional costs in the final cost of the product. At the same time, the increase in prices may lead to lower sales, so developers will be very careful to act in this matter. In General, the main problems in the construction industry now lie in a different plane. Is the need to build processes in the conditions of an oversupplied market and reform of legislation regulating the construction of equity, which requires developers the ability to quickly adapt to changes. On the solution of these problems they are now more concentrated.
“SP”: — will Not return “dollar” price tags for apartments?
— After the crisis of 2008, the primary market operates in a ruble zone and the impact of fluctuations in the value of buildings and property is minimal, — says General Director Tekta Group Roman Sychev. Accordingly, currency fluctuations will not be so significant for the sector and real estate, it is not exported by the industry they are working in the area of national currencies. Let me remind you that in 2015 most developers of luxury housing have rewritten the cost at prices denominated in rubles. Moreover, it will not affect larger segments of the mass market and business class, where the majority of customers have income in rubles, not foreign currency. Dollar price tag can return only if there is demand from buyers, and this demand has formed the necessary capabilities.
“SP”: — How much the sellers will be forced to raise prices due to rising costs of building materials due to the growth of the exchange rate? Will be introduced or amplified any of the action?
— Today, the developers, at least if we are talking about new buildings comfort class, went to domestic engineering equipment and materials, says CEO Level Group Kirill Inahin. — Why such a sharp jump in prices for materials, what we saw in 2008 or in 2014 is not likely to happen. However, construction sites are still running foreign equipment, and therefore may increase the cost of operation that will be reflected in the prices for services of contractors. In addition, they can raise their prices for some types of finishing materials if new development is dealt with repair from the developer. If the developer does not prefer domestic counterparts, more expensive bathroom fixtures and fittings. Accordingly, it can lead to growth of cost of apartments.
— Often developers use lifting equipment of foreign production, air conditioning systems and system engineering, high quality materials. Of course the rising prices of the cost of the expensive projects will happen — agrees Andrey Kalachinsky, and developers will have to take this into account in pricing. To say exactly how much prices rise, difficult the adjustment will be different in different projects.
— But how much to raise prices on their items because of the increased cost of building materials zastroyschiki can not, as in so great an excess of supply, which is observed now in the “primary” of Moscow and Moscow region, they simply can not compete with other developers, and sales in their projects just stand, — says Mikhail Kulikov. — While some players in the primary market on the wave of volatility rates stimulate the interest of their projects and, like a mantra, I repeat that the prices will only rise. In contrast, I note that over the last three years of sanctions for “a primary” the Moscow region has reached an enormous amount of proposals, and we did not record a significant increase in prices in this segment. Moreover, discounts at selected projects reached 30%. Discounts are now, on average in the range of 5-6% for the Metropolitan area.
In the secondary housing market, according to our observations, 80% of sellers put their property on sale at inflated, pre-crisis, value, and their very hard to persuade to reduce the price proposal. Some of them are waiting out for a deal within a year or two, if not more, and a sharp rise in foreign exchange rates is unlikely to predispose them to a quick sale. And only 20% of sellers are willing to sell their property at a fair current market value. Perhaps the last, hurrying as soon as possible to sell the flat and get the money on hand (for example, to convert them into foreign currency), are more willing to make concessions to potential buyers, for example, providing a discount of greater size.
“SP”: — What will happen with the jump in the exchange rate with the amount of supply in the housing market?
— Sanctions and fluctuations in currency exchange rates can only indirectly help to reduce the volume of supply in the housing market — sums up Andrew Kolacinski. — That if the economic situation seriously deteriorates and developers do not have anything to build… In General, the volume of supply in the segment of new buildings does not depend on the fluctuations of currencies. In recent years, issued a large number of planning permission in the Moscow region. The developers tried to speed up and to obtain permits for their projects in advance, before the entry into force of new amendments to the law on joint construction. Now record the volume of supply, but over time the dynamics of the output of new projects will be reduced.
If we talk about the secondary housing market, do not rule out that in light of recent events, some sellers may decide to postpone the sale of their properties, fearing to remain with a large number of depreciating rubles on hand. However, the people making the alternative transaction (selling old and buying a new apartment), are unlikely to delay the solution of housing problems. Overall, therefore, significant changes in the volume of supply in the secondary market is not expected.