The activity on the domestic market last summer was a quarter lower than last year, Cyan.Analytics experts calculated. The average cost of houses (including prefabricated houses, both for year-round residence and summer cottages) continued to rise in most regions. However, in 18 of the 82 regions analysed, prices began to decline.
The decline in prices was recorded in the northern regions, where construction is not very developed (Komi, Arkhangelsk, Murmansk regions – by 9-11%), but also in regions with active construction: Leningrad region, St. Petersburg, Moscow region (1%, 3% and 5% respectively), Krasnodar Territory (6%).
In the Moscow region, this is not the first case of price reductions, analysts note: a similar situation occurred in the Moscow region last year and in Moscow in 2022.
According to experts, the fall in prices is due to several reasons. Firstly, due to very high prices in the vicinity of the capital, buyers began to consider neighbouring regions. Among the regions with positive price dynamics are the areas around the Moscow and St. Petersburg regions, as well as the regions of the Volga Federal District, the Urals and Siberia with a high share of industry in the economic structure, where household incomes have increased significantly over the past two years.
For example, former Deputy Prime Minister Marat Khusnullin noted that after the opening of the M-12 highway, interest in housing in the Vladimir region increased, as it became easier for Muscovites to get to it.
In addition, the structure of the offer has changed, Cian notes: more objects with a small area and, therefore, lower cost have appeared on the market in Moscow and the Moscow region, analysts note.
The trend towards a reduction in the area of a house has been observed for at least 3 years, says Vyacheslav Kotlov, director of the construction company HalleHouse. There are several reasons for this: lower overall construction costs, an increase in the number of “small families”, the desire of young families without children to leave the city, who simply do not need large areas yet.
Meanwhile, although everyone who builds a compact house is happy to be saving, the average citizen often does not understand that in reality the savings on a small area are imaginary, says Kotlov. This applies to wooden houses with an area of less than 80 m2, which belong to the category of “mini-houses”. “In percentage terms, building a mini-house is more expensive: funds are often spent on “trimming” if the dimensions of the mini-house are not a multiple of three. The fact is that lumber is sold in molded pieces. 6 meters. And if the dimensions of the house are a multiple of three, then you can save on lumber – everything is used! The second point is the difficulty of working in cramped conditions. For example, it is easier for finishers to finish a large bathroom than a small one. In addition, there is no need to wait for a volume discount. The third point is the difficulty of selecting proportionate materials. You will not lay large tiles that are advantageous for a small house. It seems strange. All of this increases the cost of a small house, per square meter. Although the total cost may be lower.
“There is actually no decline in the cost of housing, but we do not expect a sharp increase either. The market is stable and is subject mainly to seasonal fluctuations,” says Kotlov.
Nowadays, customers have a better choice of the area and functionality of country houses than they did 5-10 years ago, says Vera Vavilova, general director of DDM-Stroy. Assessing their ability to maintain their future home (cleaning, heating, routine repairs, etc.), people are increasingly choosing houses with an area of 100-150 square meters instead of 300 or more square meters, as it was before. “The cost per square meter is constantly increasing, but the total cost of houses has decreased due to the reduction in area,” says Vavilova.
A modern, well-thought-out house with an area of 120 sq. m is similar in functionality to a 150-170-square-meter house designed 10-15 years ago, says Olga Magilina, head of the rural real estate department at VSN Group. At that time, losing 25% of the space to non-functional hallways and entrance halls seemed normal, but today’s buyer finds it extremely difficult to sell such a house.
As prices have slightly decreased in regions with the largest volume of active supply on the suburban market, the average price of a house in Russia has decreased over the summer, Cyan reports: from 10.6 million rubles at the end of May to 10.4 million at the end of August. For comparison, last year during the three summer months the average cost of a country house in the Russian Federation also decreased slightly – by 1.1%.
The interest in the urban real estate market also influenced the fall in housing prices: demand here was high due to the final and expected modification of preferential mortgage programs. And the growing demand for land: more and more people prefer to build on their own or under personal control, without finding ready-made houses suitable for a specific order or without trusting their quality.
With the liquidation of preferential mortgages and the reduction of their maximum amounts, the demand for suburban real estate has, of course, decreased, says Artur Khafizov, a member of the board of the Association of Wooden House Builders. Even IT specialists who booked houses and planned to buy them after the program conditions changed found themselves in a difficult situation and could not buy what they wanted. Many of them, even if they want to buy a house in a non-capital region, work in IT companies in Moscow or St. Petersburg, which are no longer covered by the program.
In the future, there may be a certain drop in demand and prices; many contractors say that they have not received a single order in recent months, says Khafizov. Companies that are experiencing difficulties can offer discounts on houses that have already been built or are in the final stages of construction. However, there are no prerequisites for reducing the cost of houses built to order at the customer’s site, the expert continues.
“We are supposed to face stagflation, when demand falls but prices continue to rise,” says Khafizov. “We have a lot of money on deposits, if at some point people understand that money will continue to depreciate, they will rush to buy houses, and then, on the contrary, there will be a jump in prices.”
Prices for country houses have risen and will continue to rise; there are no preconditions for reducing them, says Vavilova: “Demand is high, there is a catastrophic shortage of personnel, materials are becoming more expensive. Our company has experienced increased demand. In the regions this spring and summer we have built houses in Magadan, Samara, Tolyatti and Astrakhan. Demand in the capital region is also high.”
It should be understood that in 2023 alone the cost of building a country house increased by almost 30%, and prices for end buyers during this period increased by only 15%, says Magilina. In 2024, the rise in the cost of construction and finishing materials will continue, and in such circumstances, in her opinion, a further increase in prices for country houses for end buyers cannot be avoided.
