Prices for new buildings in two months rose in almost 50 Russian – study

TASS Russian News Agency | Sep 13, 2019 at 4:22 PM

MOSCOW, September 13. / TASS /. Prices in the Russian market for new buildings after switching to escrow accounts in July rose in almost fifty cities, site domofond.ru said in a report released on Friday.

The study included 63 cities of the Russian Federation with a population of more than 250,000 people.

"Since July 1, after switching to escrow accounts, in 48 out of 63 cities, prices for primary real estate rose from 0.1% in Cheboksary to 4.8% in Moscow," the study said.

According to the study, at the top of the rating is Moscow, with the cost of one square meter from July 1 increased by 4.8% - up to almost 240,600 rubles in August. In second place is Irkutsk, which showed an increase of 3.6% - up to 64,400 rubles per 1 square meter. In the third is Nizhny Novgorod (an increase of 3.4% - up to 76,100 rubles per 1 sq. m). The five cities in Russia with the highest price increase for new buildings also included Simferopol (2.8% - up to 73,600 rubles per 1 sq. M) and Sochi (2.7% - up to 124,600 rubles per 1 sq. m).

As Dmitry Alekseev, the head of primary real estate at Avito Real Estate, told TASS, over the past two months (July, August) a square meter in the Russian market for new buildings has risen by an average 2.9% to 72,500 rubles. "So far, the price dynamics are not very different from the indicators of previous periods. However, housing has appeared on sale, which is sold according to the new rules, and the cost per square meter there can be up to 10% higher (depending on the project and location) than in similar facilities where sales are conducted at the old standards, "he said. The expert also drew attention to the fact that in July-August, average housing prices also rose in the secondary market of the Russian Federation - by 0.8% to 65,300 rubles per square meter.

"The cost in the secondary and primary market is always interconnected. The price in a new building rises, demand flows to the secondary market, as a result of which the cost increases there," commented Yaroslav Darusenkov, head of the consulting and analytics department at the ABC Housing company. According to him, the increase in the cost of housing in the secondary market is due to changes in the legislation regulating the market for new buildings. "By the end of the year, this trend is expected to continue," he added.

According to domofond.ru, over the summer, a decrease in prices for new buildings was noted only in nine Russian cities. The most significant dynamics, in 1%, was recorded in Kostroma. In June 1 square m was worth 47,000 rubles, in August - 46,600 rubles. Belgorod ranks second - a decline of 0.9% to 60,100 in August. The cost of the "primary" housing in Saransk and Penza fell by half a percent. In the other five cities, the decrease is insignificant - by 0.1%.

About Escrow

Since July 1, 2019, Russian developers have lost the opportunity to attract money from equity holders directly. Funds of citizens invested in the purchase of housing will be stored in escrow bank accounts, while construction will be carried out through bank loans. It is expected that the overpayment of loans developers will lay the cost per square meter. Developers will be able to use the money of interest holders only after putting the object into operation and registering the right of ownership of the first apartment in the Unified State Register of Real Estate.