Krasnodar, 18 March. At the end of February, the Central Bank steeply raised the key rate from 9.5% up to 20% to stabilize the financial market.
As a result, in March the interest rate of mortgage credits issued in the Kuban region soared up to 23% per annum.
This factor just increased the tensions in the realty market. The prices had been constantly growing for the past two years, and the toughened terms of ‘soft’ mortgage loans had reduced its appeal. So, there were quite a few restraining factors in the realty market. Now the force majeure consequences related to the government’s external policy were added to them.
Our experts confessed that the market has adopted a wait-and-see attitude. Under this uncertain situation, some of the new projects in Krasnodar Krai (as well as in other Russian regions) were suspended.
“We see the prices for construction materials grow; we cannot predict how the situation turns – there are too many wildcat expectations in the market at the moment. This is why the developers are waiting for the situation to clear up,” Aleksandr Spasov, Metrix Development General Director, commented. “Due to the limited validity term of the governmental support programs, we are not facing a significant price rise for real property so far – the higher prices of the construction materials are compensated for by the lowered demand because of the reduced affordability of mortgage loans. As soon as the support programs change and mortgage rates stabilize, the prices may be corrected – but to a lesser extent that the prices for construction materials were altered. Most likely, most of the developers will have to refuse from part of their income. In the longterm prospect, we can observe suspension of implementation of new projects. If this trend would persist, it may instigate the prices for realty to soar up (if there would be an adequate demand)”
The construction business cannot understand what the demand and people’s solvency will be; neither it is confident that banks may provide any financial backup.
Rudik Gavrilov, owner of the Kvadratny Metr (Square Metre) Realty Agency, says that developers are now using different scenarios because of the uncertainty: “Some began to raise their prices – from 10,000 up to 50,000 rubles per square metre. Others have simply suspended their sales hoping to resume sales at the end of the year for 220,000 roubles per square metre. However, such expectations may hardly be justified: by the end of the year, there simply will not be people who may afford to buy a flat at such price. Those who do have some savings are turning them into cash and buying flats now.”
Ilya Volodko, MACON Consulting Company General Director, says: “In any case, we can assert that we will see a big fall in demand for realty this year. We reckon that the demand will fall down by 20 to 30% at least, and later we will see if it continues to go down. The current situation prevents us from reckoning that the prices may be going up.”
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