Page 139 - RusRPTJan23

program would continue, albeit at a slightly higher rate of 8%. These discounted mortgages are causing Russia’s real estate market to overheat. The primary and secondary housing markets are unbalanced (the price difference between a new apartment and a “maintained” apartment is now 40%). Subsidies have made housing more affordable for more citizens, who have decided to take out mortgages now rather than wait. Demand has risen sharply — faster than supply can adapt — and prices are soaring. In Moscow, it is now impossible to buy a comfort-class apartment in a new building without taking out a mortgage. However, this bubble is unlikely to burst, according to independent financial analyst Sergei Skatov: developers have already sold more than 51% of the housing due to come onto the market by the end of 2023. They need to sell a further 10-20%, which is entirely achievable even if demand falls to summer levels. Defaults on mortgage portfolios could also burst the bubble, but with a failure rate of just 0.4% (and 0.15% in the primary market), this is also unlikely, Skatov said.
Demand for luxury homes in Moscow has fallen to its lowest level in five years, according to research by real estate company NF Group. The number of property sales in so-called elite new builds in the Russian capital fell 44% y/y, from 1,620 sales in 2021 to just 900 in 2022, the lowest number recorded for five years. A drop off in demand in light of the "geopolitical situation" and the economic crisis was expected, NF Group analysts said.
139 RUSSIA Country Report January 2023 www.intellinews.com