Residential realty prices review (August, 2016): what we may expect

The cost of real estate and the causes of price growth and decrease have always been key, both for buyers/residents (in speaking of the housing segment) and investors, including developers, and interest in the issue has grown lately. Being aware of the necessity of having a finger on the pulse of this sphere, Construction.ru has started a series of publications on real estate price reviews in Moscow, the Moscow region, Saint Petersburg and the million-plus cities.  We hope this information will be useful for our readers. So, we start with a review of prices for residential real estate in August.   

New-builds

The largest Russian cities showed relative steadiness in August. The most expensive new-build is situated in Moscow, which is not a surprise: the average price of a square meter there is 166,326 roubles, and an average flat is sold for 10,942,869 roubles. The top five cities with the most expensive “squares” include Saint Petersburg (99,803 roub./sq.m), Sochi (82,126 roub./sq.m), the Moscow region’s towns (with an average cost of 80,256 roub./sq.m) and Yekaterinburg (69,441 roub./sq.m).

 

Prices for primary realty in Russian regions (August, 2016)

 

City	Average price, roub./sq.m	Average price of a flat, roub.
Moscow	166 326	10 942 869
Moscow region	80 256	4 387 583
Saint Petersburg	99 803	6 097 799
Sochi	82 126	5 314 018
Volgograd	43 998	2 801 667
Kazan	64 558	4 136 001
Saratov	33 921	1 908 903
Novosibirsk	58 817	3 001 987
Voronezh	45 589	2 871 019
Rostov-on-Don	58 476	3 128 768
Nizhny Novgorod	67 458	4 297 013
Samara	52 340	3 489 212
Perm	52 998	2 978 245
Chelyabinsk	38 893	1 867 997
Krasnodar	49 002	2 867 927
Yekaterinburg	69 441	3 915 014
Omsk	43 176	2 110 117
Krasnoyarsk	49 480	2 601 234
Ufa	63 011	3 858 116

 

Let us consider the structure of Moscow’s data in details, as the division of residential real estate by segments is explicit.

As compared with July, the weighted average price in the mass segment of new-built realty decreased by 2.6% in Moscow, for the year by 7.9% and the cost was 232,600 roub./sq.m (excluding elite housing). The cost of flats fell by 2.7%, and apartments by 4.1%.

Source: Est-a-Tet

 

August showed a decrease in the weighted average price in economy class by 8% to 114,500 roub./sq.m (which is connected with the new volume output in the “Nekrasovka” residential complex). Business class fell by 1.3% to 250,800 roub./sq.m,and comfort class by only 0.3% to 152,400 roub./sq.m.

The highest weighted average price was registered in the Western and Northern administrative areas of Moscow, at 192,000 roub./sq.m and 171,500 roub./sq.m correspondingly. The lowest one was registered in Zelenograd — 90,800 roub./sq.m.  

The weighted average price of premium-class offers in August was 810,000 roub./sq.m, which is 4,000 roubles lower than in the previous month, and 50,000 roubles less than at the beginning of the year (almost a 7% fall).

Source: Est-a-Tet

 

Within old Moscow’s boundaries, in August there were sales of 102 projects with a total area of 627,700sq.m (2.9% more than in July). The weighted average price, as compared with the previous month, went down by 2.3%, to 371,800 roub./sq.m.  

Being divided into classes, the weighted average price of apartments grew only in the premium segment, by 0.4%. The largest decrease was registered in the segment of elite apartments, which was 5.9%.

The price dynamics in the elite segment significantly depend on currency fluctuations. The comfort class price went down by 1.8%, and in business class, by 0.5%. The price changes are connected mainly with the changes in volumes and structure.  

 

Source: NAI Becar Apartments

 

The highest weighted average price in August was registered in the Central Administrative Area of Moscow, at 621,200 roub./sq.m, and the lowest in the South-Western Administrative Area (AA) – 146,500 roub./sq.m. For the month, prices grew in the North-Western AA (+2.4%), the North-Eastern AA (+1.6%), the Eastern AA (+1%), the Southern AA (+0.3%) and the Northern AA (+2.3%).

The price growth in administrative areas is connected with the growth of the construction readiness of the projects under implementation. Decreases in the weighted average price took place in the Western AA (-7%), the South-Western AA (-0.6%), and the Central AA (-1.3%). The price decrease in the Western AA is connected with a new apartment complex having been put into operation. In other areas the price changed depending upon structure and volume.

In the year’s dynamics, the apartment offer volume has not actually changed. New apartment projects are mainly in the upper price segments.

In our opinion, the apartment format will gradually move from mass segments to more expensive ones, as the great volume of offers in the available segment means cheap apartments are in less demand than before, when cheap flats were lacking.

 

The secondary market

Sellers and realtors remarked upon the definite activity of purchasers in summer; however, this did not mean an increase in the number of sales. It was more about monitoring prices and offers.

At the same time the correlation of the top five prices on the secondary housing market continued: Moscow, with a price of 201,430 roubles per square meter is followed by Saint Petersburg (105,717 roub./sq. m), then Sochi (95,900 roub./sq.m), the Moscow region’s towns (83,902 roub./sq.m) and Yekaterinburg (80,900 roub/sq.m).

 

Prices on the secondary housing market of Russian cities (August, 2016)

City	Average unit price, roub./sq.m	Average flat price, roub.
Moscow	201 430	14 432 633
Moscow region	83 902	4 961 339
Saint-Petersburg	105 717	7 037 663
Sochi	95 900	6 808 717
Volgograd	55 797	4 121 872
Kazan	68 569	4 016 514
Saratov	43 291	2 314 094
Novosibirsk	61 442	3 455 387
Voronezh	45 249	2 601 303
Rostov on Don	63 929	3 482 131
Nizhny Novgorod	65 147	3 689 919
Samara	61 637	3 457 591
Perm	49 160	2 889 508
Chelyabinsk	41 615	2 453 376
Krasnodar	51 034	2 793 338
Yekaterinburg	80 670	5 670 244
Omsk	44 607	2 340 080
Krasnoyarsk	53 101	2 993 780
Ufa	65 755	4 020 286

 

In Moscow the secondary market in the mass segment showed an increase: the average unit price of offers rose by 0.9% to 214,500 roubles for 1 square meter. At the same time, the offer volume increased by 5%, totaling 45,700 flats.

The secondary market in New Moscow is worth mentioning, as it did not change in any practical way; the average unit price here was the same as in July (111,200 roubles for a square meter).

SOurce: MIELE — Real Estate Offices network

 

The share of new offers grew to 18%, which is a bit higher as compared with July, but lower than in other months. Sales structures showed an increase of the share of 2-roomed flats to 44%.  Due to this, the average purchase size grew to 9.5m roubles (to compare: in July it was 9.1m roubles).

As far as 1-roomed flats are concerned, average purchase size decreased and was only 6.0m roubles, and as for 2- and 3-roomed flats, it was 8.8m and 13.4m roubles in August, respectively.

In the experts’ opinion, the increase of the prices is connected with a ‘washing out’ of the most marketable objects.

The dynamics of the offer price for different classes in August is shown below.

 

SOurce: MIELE — Real Estate Offices network

 

The average price of a square meter on the Moscow secondary realty market in August was $17,700 (about1.1m roubles) — 70% of apartments are priced in foreign currencies. The minimum price of a lot (a flat) with an area of 34.6 m² is registered in Khamovniki and costs $549,132 (complete finishing), and the maximum price of a flat with an area of 700 sq.m in the vicinity of Tverskaya was $35m (without finishing).

The average unit price in the Moscow region within standard deviation is 83,900 roubles for a square meter.  The offer volume did not change in any practical way: it was 45,100 flats.  In the Moscow suburbs it decreased by 1%, while in distant areas it increased by 2%.

In Saint Petersburg, price distribution was as follows. In the mass segment the cost of a square meter was 98,800 roubles, which is 0.3% higher than in July. The elite segment went up by 1.5% to 330,000 roubles for a square meter.

 

What is to be expected?

In spite of September being barely over, experts are registering price growth, both on the primary and secondary markets. It is seen in almost all regions, but it is too early to speak about actual movement on the market and a square meter price increase. Sellers are warning that the majority of apartments are being sold with a discount: these are promotions and special offers with the primary market, and price negotiations with the owner on the secondary market.

So, we do not predict significant changes in September.

Olga CHUDINOVA

The editorial office thanks Est-a-Tet, MIELE — Real Estate Offices network, NAI BECAR Apartments and Lifedeluxe.ru for help in the preparation of this material.