Analysis and trends of the real estate market according to CIAN data

The real estate market is relatively inert, all changes occur gradually, including due to the duration of the transaction cycle of 2-3 months. Therefore, in the month that has passed since the entry into force of innovations in the legislation (of June 1, 2019), it is difficult to notice changes.

Now the market is going on a rather strange thing from the point of view of classical economic theory: record high sales rates against the background of record high prices and against the background of record high levels of supply. And all this is taking place in the context of reduced economic growth and a decline in real incomes of the population.

This story does not fall under any classical econometric theory. The slide shows the Moscow and St. Petersburg markets, which are largely skewed by the peculiarities of the development of our state. But, nevertheless, the graphs are indicative.

If I was asked a year ago whether the market would be able to show such results, I would say no. If we recall August 2018, then this is an increase in geopolitical macroeconomic tension, and the expectation of new sanctions and other factors.

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However, we see growth in all markets in the first half of 2019. The same can be seen in the monthly charts. If we compare the results of the first half of 2018 and the same period of 2019, then all the most interesting local markets grew. This data is not from Rosreestr. We order the information ourselves, analyze it and turn it into an analytical product that can be used to make management decisions.

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Price is a clear and obvious indicator. Prices are rising. An upward pace in the market has been seen for the last year and a half. There are objective factors of growth: an increase in VAT, an increase in deductions to the fund of equity holders, the cost of adapting developers when switching to escrow accounts. There are also subjective factors. When the cycle of increasing mortgage rates began and the information background was formed due to the transition to escrow accounts, developers successfully used this wave for advertising campaigns.

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As a result, prices rose in all locations of interest to us. In Moscow, the average price per square meter has grown from 187 to 206 thousand rubles. Prices rose by 20% in New Moscow, where, among other factors, the opening of the metro was the impetus. Even in the rather conservative market of the Moscow Region, an increase of 5% was noted. During the month from June to July, prices did not change much.

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Another interesting indicator that became available just a few months ago is the actual transaction prices.

If the previous charts were based on the prices indicated in the offer, now there is access to the real prices of transactions through the website of the equity holders fund. This allows you to analyze the real amount that buyers pay for specific premises. Here you can also see that prices are growing, this happens in all locations.

The difference in Moscow with the previous value of 206,000 (on this slide 214,000) rubles is explained by the fact that the elite market does not participate in the previous analysis.

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It can be seen that these prices are also growing. Over a six-month period, Moscow deals added 6%, the deal in New Moscow 17%, in the Moscow region 7%, in St. Petersburg and the Leningrad region about 10%. In the regions the figures are close. We do not track the regions in detail, but according to the statistics that exist, the increase is about 10%.

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An interesting and important factor is the dynamics of mortgage transactions. Mortgages are one of the key drivers of demand. The launch of the mortgage subsidy program allowed the market to survive the difficulties that arose in 23015-2016.

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In the spring of 2018, mortgages broke through the 10% milestone, and the media wrote that the level of mortgage loans is at a historic low. On advertising billboards, many people could see from 6%, but the effective rate was still about 9-9.5%. Then there were two waves of increase in the key rate, and the mortgage rose to 10.5%.

It would seem that the psychological crossing of the 10% threshold should have been reflected in the volume and share of mortgage transactions. But the graphs show that this did not happen. The volume of mortgage transactions remained in the region of 50-60%. Hence we can conclude that the level of mortgage rates of about 10% is comfortable for Russian borrowers. Although it is very high in terms of European and world practice. But given that our buyers are used to 13-15% rates, a 10% rate looks better.

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As we can see, the situation with mortgages has not changed much. Lending remains a key driver of demand. In some projects, up to 70-80% of transactions are carried out using mortgages.

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Another important factor is the volume of the new supply. The graph shows the volume of the new offer by buildings.

In 2018, developers went to great lengths to bring new projects to market according to the old rules. For example, in June 2018, for some reason, many permits were obtained on weekends, many permits were obtained for projects for which there is only paper documentation. But in fact, a large volume of potential supply has been received, which will gradually enter the market. In fact, so far the first half of 2019 is not very different in terms of the volume of the new proposal, despite the legislative changes.

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. When they talk about how the price changes, then the figures for different analysts can be so different that it is difficult to understand them. This is due to the fact that the formulas for calculating and selecting objects are different.

We took all the houses that were displayed in the period under review. The rise in prices is obvious. In 2017, new projects were withdrawn an average of 165,000 rubles, in 2019, 192,000 rubles were withdrawn. This is an increase of almost 20%, it is very noticeable for most of the buyers.

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Market leaders in both the Moscow and St. Petersburg regions are clearly expressed by one leader. In the Moscow region it is the PIK company, in the St. Petersburg region – Setl City. In the second place in recent years are the companies Airplane and LSR.

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In the table you can see the dynamics of companies in recent years. At PIK it is clear that there are almost no dynamics. This is due to the fact that many projects have already been commissioned, and past transactions are not visible in the period under review.

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In total, in the Moscow region in the first half of 2019, there were 77,000 transactions for DDU. These are final deals with end customers. These data differ from Rosreestr, because according to Rosreestr statistics, there were many transactions when developers transferred objects from legal entities to individuals. According to the results of the first half of the year, the market growth was + 10%, but by the end of the year I expect an overall growth of + 7% due to difficulties in transferring to escrow accounts. For some projects there is advertising, there are reservations, but for one reason or another it is not possible to carry out a deal in the Rostregion.

Transaction prices have increased by 16% compared to last year. Approximately the same level will remain by the end of the year, as a further increase is impractical.

The active supply (how many lots are actually on sale) is now about 100,000 apartments. There was a lot of talk about the decline, but there is none. At the end of the year, a decrease of up to 10% is possible.

Offer prices are a poorly representative indicator for the region as a whole due to strong averaging. In the first half of the year, an increase of + 7% is visible, the growth will continue due to the fact that the supply structure is changing. There are fewer objects in the pit, and the higher the degree of readiness, the higher the price.

The new supply at the end of the first half of 2019 increased by 16%, but at the end of the year 0% is expected, because by the end of the six months not a single new building had been released. Mortgage accounts for 54% of all transactions. May increase by 2-3%.

Alexey Popov (CIAN) read the report.

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