The dollar impacts the real estate market.

The rise in the dollar exchange rate could reduce the number of transactions with elite real estate by a third.

The dollar and euro exchange rates are reaching historical records. If the trend of significant strengthening of foreign currency continues, the real estate market could suffer, especially in the premium segment.

Today, the euro exchange rate, set by the Central Bank, has risen to 47.49 rubles, breaking another historical record. The dollar exchange rate has increased to 34.7 rubles. At the beginning of 2014, the dollar was valued at 32.6 rubles. For comparison, at the beginning of 2013, the dollar exchange rate was 30.4 rubles. The annual peak of 2013 was recorded on September 10, when the dollar reached 33.32 rubles.

Such currency fluctuations change the price dynamics in the real estate market. "The ruble began to fall in the second half of October 2013, then stabilized at the end of November and December, and in January, the Russian currency started to decline again.

If we compare this with the dynamics of housing prices during the same period, prices have slightly increased in rubles - within 3%, and decreased by about the same percentage in dollars and euros.

Therefore, the trend of "averaging" continues: during currency fluctuations, housing prices take a certain intermediate position," explained Oleg Repchenko, the head of the analytical center "Indicators of the real estate market IRN.RU," to "Gazeta.Ru."

According to most experts surveyed by "Gazeta.Ru," the greatest negative impact of the dollar's rise against the ruble will be felt in the premium-class real estate, where a significant portion of transactions are conducted in dollars. Recently, experts have observed an increase in housing purchase transactions - within 5-7%, which was caused by currency fluctuations.

Alexey Sidorov, deputy director of Kalinka Real Estate Consulting Group, told "Gazeta.Ru" that the situation in the luxury real estate market will depend on how long the trend of significant dollar depreciation persists. "Such dollar leaps are traditional for the beginning of the year. If the dollar returns to an acceptable level in the near future, it will not affect the market," believes Alexey Sidorov. -

If this is a sustainable trend that lasts more than three months, then it will become a significant problem in the luxury real estate market."

«Purchasing finishing materials, general contract agreements are tied to the dollar or euro, and in the event of their price increase, the cost of construction increases. In this case, developers will have to either include their costs in the cost per square meter or switch to cheaper materials and equipment,» Sidorov speculates.

However, an increase in housing prices leads to a decrease in demand, so according to expert assumptions, developers can fix the exchange rate at a certain level. At the same time, large developers have long established prices in rubles, according to experts. «Projects with dollar prices have seen an increase in the internal exchange rate, which the company uses to calculate apartment prices, however, it is still lower than the current exchange rate of the Central Bank of Russia. Overall, significant price increases in the housing market due to changes in the dollar rate are not expected, since the majority of projects are implemented in ruble prices,» says Elena Rzhavskaya, Director of Consulting, Analytics, and Research Department at Blackwood.

According to Dmitry Khalin, Managing Partner of IntermarkSavills, any fluctuations in exchange rates that last longer than a week have a negative impact on the process of real estate transactions.

«It becomes more difficult for sellers and buyers to negotiate the purchase of real estate. Buyers think in terms of the old exchange rates, while sellers recalculate prices based on the new rates. This can lead to a 25-30% decrease in the number of transactions.

However, if a period of stability occurs, lasting at least 2-3 weeks, the market becomes active,» Dmitry Khalin told «Gazeta.Ru».

For comparison: at the beginning of 2008, the exchange rate was 24.4 rubles per dollar, while in early March 2009, it was 36.2 rubles. By the beginning of 2010, the dollar had dropped to 30.18 rubles. «This did not immediately affect the market; it happened over the course of a year. Prices for individual properties decreased significantly. Most transactions during that period were made for investment purposes,» says Andrey Kuznetsov, CEO of SOHO Estate. According to Oleg Repchenko, at that time, prices fell not due to the ruble exchange rate, but due to the global crisis.

According to Dmitry Khalin's assessment, the critical level for the luxury real estate market is 45-50 rubles per dollar, at which point the market may stagnate. According to Andrey Kuznetsov's forecast, even a rate of 40 rubles per dollar could be a turning point for the luxury real estate market.

However, according to the most pessimistic forecasts of analysts, in a corresponding unstable economic situation, the dollar may reach this level by the end of 2014. Meanwhile, the Ministry of Economic Development's forecast for 2014 is 33.9 rubles per dollar. «The devaluation of the ruble against the dollar almost immediately affects the spread between the ruble and dollar price of real estate – it widens. I think the key risk for the real estate market could be a sharp (10-20%) devaluation of the ruble, which would significantly reduce the purchasing power of the population, and consequently, affect the demand for real estate. Overall, with the current dynamics of the Russian ruble, I do not expect strong fluctuations in the real estate market. At the end of 2014, the dollar will most likely be worth 34-35 rubles, and the euro, accordingly, 45.5-46.5 rubles. So, the current levels can be considered close to local highs for the currency basket,» predicts Anton Soroko, an analyst at the investment holding company FINAM.