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- Era of stagnation: the rate of housing commissioning in Russia collapsed for the first time in several years
Era of stagnation: the rate of housing commissioning in Russia collapsed for the first time in several years
In December 2024, the indicator of housing volume input decreased by 13%, although before that every month for several years showed a slight increase. This follows from the report of the Central Bank, which was analyzed by "Izvestia". Now because of high interest rates on loans and the abolition of mass discount mortgages, the demand for apartments is falling, while developers are reducing the number of offers and even start to build less, experts noted. Thus, the volume of new projects compared to 2024 will be reduced by 27-38%, while about 70% of commissioned square meters are still on the balance sheet of developers. Whether the current situation will lead to a full-fledged crisis in the housing market, - in the material "Izvestia".
How much the market has fallen
Housing commissioning has fallen sharply at the end of 2024 in Russia, it follows from the Central Bank report on the regional economy, which was familiarized by "Izvestia". In December, this indicator in the whole country fell by 13.3% at once.
The market situation varies significantly by region. The Bank of Russia collects data on its seven main departments in different parts of the country. Housing starts in December decreased the most in the south of Russia - by 23.1%. In the north-west a little less - by 22.6%, and in the central part - by 14.9%. The smallest decline was in the Urals (only by 2.2%).
Earlier, in October, in Russia as a whole there was a slight decrease in the volume of housing commissioning, but it was insignificant - by 2.6%. Before that, this indicator had been increasing all year long. And in January 2024 and December 2023 the growth exceeded 30%. However, in July, the Central Bank began to sharply increase the key rate, in October - to a record 21%. Because of this, the demand for mortgages decreased significantly. In addition, in July, the authorities significantly tightened the conditions for preferential programs.
In Russia, stopped issuing mortgages for new buildings at 8%, which was launched back in 2020, and also set restrictions for obtaining a family mortgage. Now families with children under the age of six, as well as families raising a minor child with a disability can draw up this program.
In 2024, there were more postponements of apartment buildings for future periods than in previous years, reminded "Izvestia" head of the analytical center "Cian" Alexei Popov.
- This is due to a decline in demand, a decrease in the rate of filling escrow accounts against the backdrop of growing construction inflation," he explained. - Last year's growth could be associated with a number of decisions made at the end of 2023 on the registration of previously erected buildings, including within the framework of the dacha amnesty. In 2024, this process was smoother, with no obvious peaks in the distribution of indicators.
The decrease in the rate of housing commissioning was confirmed to Izvestia by the Director for Mortgage Sales and Implementation of Financial Instruments of A101 Group of Companies. Current volumes are provided by the projects launched in 2020-2022, when demand was high and affordable mortgages stimulated active construction, said Alexei Artoshin, Commercial Director of Glavstroy Regions.
In 2025, the volume of new housing construction projects will drop significantly, analysts of Dom.RF predict. According to the state-owned company, the volume of new projects compared to 2024 will decrease by 27-38%, from 48 to 30-35 million square meters. m.
At the same time, there is no drop in commissioning rates in the high-budget segment. On the contrary, 11 projects entered the Moscow market in 2024, which is comparable to the results of 2023, said the head of sales department of the development company UNIQ Development Valery Ruchiy. And the number of transactions in this segment has increased by about 40%.
Why construction rates have fallen
The reduction is primarily due to the risk of increased debt burden of developers due to expensive project financing - developers in the current environment are not confident in the fulfillment of the necessary sales plans to reduce rates under this mechanism of construction, believes the director of the federal company "Etazhi" Ildar Khusainov.
- The second factor is high inflation risks, not all financial models are able to withstand them and ensure sufficient profitability of construction, - said the expert. - Hype demand and price growth in recent years has greatly weakened the financial efficiency of some developers: lack of lean production, procurement management, excessive marketing and advertising costs.
Another important factor, as Ildar Khusainov noted, is that under these conditions, large and dynamically growing players have appeared in the construction market, which are taking up an increasing share, and it is becoming more and more difficult for other developers to compete with them.
Denis Zhalnin, General Director of the federal development company "People", added that many developers make joint collaborations, larger companies buy out smaller ones - all this is a correction of strategies and launch of new projects on the market.
- Besides, the growth of prices for apartments in the mass segment does not catch up with the increase in the cost of construction, - he noted. - And if large developers with their own production base and large land bank still somehow offset this factor due to volumes, then it is more and more difficult for medium and small ones to do it, because it requires, among other things, changing approaches to construction, "draining" the cost of production, including through the use of modular solutions.
Due to the high key rate, the demand for new buildings has decreased and will continue to decrease if the Bank of Russia does not softenits monetary policy, added Ekaterina Stashkova, manager of the "Mortgage" product in "Compare".
The high rate of housing delivery was previously explained by the desire to have time to deliver the housing estate before the expiration of the preferential mortgage, said Valery Tumin, Director of Russia and CIS markets at Fam Properties.
- And this is not all the problems," he emphasized. - Thus, the volume of unsold housing amounted to 76.9 million square meters at the end of the first nine months of 2024. That is, about 70% of commissioned housing is still on the balance sheet of developers.
Sales fell throughout the second half of 2024 and at the end of December mortgage issuance collapsed by 73% year-on-year in terms of the number of loans, said Freedom Finance Global analyst Vladimir Chernov.
- And by 69% year-on-year in terms of their volumes," he said.
What awaits the real estate market
In 2025, experts expect a decline in housing sales in Russia by about 20-30% on the background of the effect of the high base of the first half of last year, when there was an increased excitement in anticipation of the termination of many preferential programs from July 1. And also because of the tightening of requirements for borrowers on mortgage loans, says Vladimir Chernov. And first of all it concerns the increase of the down payment on mortgages from 15 to 30-50%.
- It is against this background that I predict a continued decline in housing commissioning by about 10% per month," he said.
This conclusion was also reached by analysts of "Dom.RF". The state-owned company noted that the developers have formed a stock of sales, which will allow them to guarantee the completion of projects, the commissioning of which is scheduled for 2025. However, due to weak demand for housing developers will reduce the launch of new buildings. As a result, housing commissioning may fall from 2027.
It noted that the average key rate in 2025 will be 20%. And nominal prices for primary housing will grow at the level of inflation, while in real terms prices will remain almost unchanged.
During 2025, developers, in order to continue their work, will be forced to sell unclaimed apartments - perhaps at a discount or with a favorable offer of installments for the buyer, believes Valery Tumin. However, sales tools are less and less available due to the introduction of mortgage standard from January 2025. For example, the possibility of mortgage cashback, which was an extremely popular instrument, has been closed.
According to Alexey Gusev, Sales Director of Glavstroy, against the backdrop of rising risks and falling demand, the peak of construction reduction will be in 2026-2027 and may amount to another 20-40%.
But the reduction in commissioning of new housing could potentially lead to a lack of supply in the market of new buildings in a few years, added Ekaterina Stashkova. It is by 2027, the Central Bank rate is expected to decline to comfortable values, the regulator itself said earlier. And this, the expert believes, will lead to renewed demand for mortgages, and the lack of supply may spur a new round of growth in housing prices.
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