Real estate has come to a halt

The cost of housing in Moscow is not growing or decreasing.

The cost of premium-class housing in Moscow decreased by 4.7% in 2013, according to analysts from several Moscow companies. Another report stated that the price of Moscow real estate in all classes, including the territory of New Moscow, decreased even more by 5.7%. However, another group of experts does not confirm such statistics - they believe that housing prices remain stagnant, and the decrease in cost is due to currency fluctuations, increased supply, or discounts.

The cost of luxury apartments decreased by 4.7% in 2013, reaching $20,200 per square meter, according to data from the KEYS Index City housing cost index (presented by Knight Frank, IntermarkSavills, and EY). For comparison, in 2011, the cost of luxury square meter increased by $480, and in 2012, it slightly decreased by $100.

The change in housing costs in 2013 strongly depended on the stage of the project. In completed residential complexes, the average cost per square meter decreased by 4.9%, in residential complexes on the initial stage of construction - by 34.3%, and in residential complexes during the construction of above-ground parts, prices increased by 22.9%.

"In 2013, the dollar exchange rate was constantly rising, so property sellers also had to adjust prices considering this factor. The process of negotiating apartment sales usually involves a discount in the range of 10-15%, but the decrease in purchasing power of those customers who held their savings in rubles led to a significantly longer negotiation process in 2013, and the average discount size increased," said Elena Yurgenova, Director of the Department of Elite Residential Real Estate at Knight Frank Russia & CIS, in an interview with Gazeta.ru.

The average cost per square meter in new buildings at the initial stage of construction is $12,750. The significant decrease (from $21,110 at the beginning of 2013) is explained by the increase in the number of new projects - sales started in 15 projects, including nine apartment complexes. In this sector, experts note several worrying factors. Firstly, the increase in the proportion of small-sized apartments in projects reflects developers' anxious expectations of possible decreasing demand. However, projects at the initial stage of construction (excluding specific projects in Ostozhenka) are less popular than already completed projects. Attracting an investor to a project at the foundation stage often requires offering discounts. However, experts believe that despite these problems, the market will still absorb the indicated supply volume. "In the luxury segment, a new building usually maintains its prestige and high level for 5 years, after which it becomes morally outdated and no longer meets many customer requirements. Therefore, they start thinking about buying an apartment in a newly built project, which is more modern in terms of engineering solutions and infrastructure. Problems with an excess of supply may arise only in the Ramenki area - on Vernadsky Avenue, Mosfilmovskaya Street. But the projects being designed and built there belong more to the business class than luxury housing," explained Elena Yurgenova in an interview with Gazeta.ru.

Experts from the Kalinka Real Estate Consulting Group company recorded a slight increase in prices - including luxury apartments, which currently account for half of the overall volume of the primary housing market, the average price per square meter on the primary market increased by 2.8% compared to 2012. According to experts from SOHO Estate, discussions about a decrease in average annual prices should be approached cautiously. "Some offerings on the secondary market are comparable or even equal in price to the primary market, and these objects have better demand than the primary market because there are no risks, clear views, etc. Quality and unique options located in the most popular central areas (Patriarch's, Ostozhenka) have stable demand and push up average prices," believes Andrey Kuznetsov, CEO of SOHO Estate.

At the same time, experts have not yet noted a decrease in interest in expensive housing.

"In 2013, the number of transactions increased by 40% compared to 2012, from 460 to 650. The annual sales volume, expressed in square meters, amounted to over 100,000 sq. m, which in monetary terms is over $1.9 billion," calculates Roman Popov, the director of the strategic consulting department at Kalinka Real Estate Consulting Group.

The decrease in prices in the secondary market in Moscow is more significant, as noted by the "Mir Kvartir" portal. According to their data, housing prices in Moscow, including the territory of New Moscow, decreased by 5.7% without taking inflation into account in 2013. The average cost per square meter at the end of the year was 189,000 rubles. The sample analyzed included about 150,000 listings.

Real estate market participants and analysts surveyed by "Gazeta.ru" do not observe a decrease in the cost of housing in Moscow. According to "Incom," taking into account New Moscow, the average cost per square meter on the secondary real estate market increased by 5.6% to 172,600 rubles. Only in the territory of Old Moscow did prices in the secondary market increase by 3.2% to 178,800 rubles per square meter. "Overall, we wouldn't call this growth. From an economic point of view, it's stagnation. It should be noted that for buyers who are also sellers, the price difference remains," says Dmitry Taganov, the head of the analytical center at "Incom." Housing prices in Old Moscow in 2013 only decreased in dollars by 2.6% and increased in rubles by 2.8%, according to the analytical center "Indicators of the real estate market IRN.RU."

However, the real estate market is currently influenced by macroeconomic factors, under their influence, there may be fluctuations up or down, but overall, they will remain at approximately the current level, at best, offsetting inflation," said Oleg Repchenko, the head of the analytical center at IRN.RU, to "Gazeta.ru."