Demand-driven price increases, particularly for smaller residential properties, could reach double digits by the end of the year in Moscow. Real estate recovery in the Russian capital depends on broader economic strength, mortgage availability, and developer readiness to meet growing demand. See the following article from Property Wire for more on this.
After a quiet summer the real estate market in Russia is slowly coming back to life and prices are expected to rise, according to property professionals.
Sales of existing housing decreased over the summer months but the market was still significantly healthier than at the start of the year, according to Natalya Blankova, marketing manager of the Peresvet-Invest estate agency.
Volumes for sale in the existing Moscow residential sector fell 4.9% in August, but were up almost 20% compared to December 2009, and up 26.4% year on year, according to figures from the agency.
She expects prices and sales to rebound strongly in the coming months with a shortage of supply possibly leading to price increases. The most sought after one to two bedroom properties are likely to see the biggest price rise. ‘In general, though, the 2010 price increase will not exceed the 8 to 12%, as we predicted earlier this year,’ she said.
The key factor in the second half of 2010 is going to be demand, according to Vasil Mitko, general director of the MIAN agency. He believes that even major supply increases in the Moscow region will not be enough.
His figures show that the average price of newly built apartment buildings have gone up 0.8% between July and August, from 159.7 thousand roubles per square meter in July to 161.0 thousand roubles in August.
Mitko added that currently the volume of new apartments being made available in the Moscow region is nearly double that available in the city with sales outside the major Moscow ring road, the MKAD, also jumping significantly.
Elena Izhboldina, head of urban sales at Century 21 Real Estate agency says that a rebound in sales will require continued promotional efforts by developers and agents, adding that a return to the financial and economic environment, with mortgage availability, before the economic downturn will be essential.
‘The real estate market will rebound and will be attractive as soon as the economy will create favorable investment conditions with the mortgage options development, emerging of the new business development waves along with oil price increase and wage increase,’ she said.
Mitko also believes that an improving mortgage environment will be a key factor in determining the strength of a property turnaround, with real income increases an additional requirement.
Olga Guseva, head of marketing at management company Domostroitel says that another key factor to keep an eye on is the ability of developers to keep up with demand, particularly in the Moscow region.
‘We expect a sharp reduction in supply on the Moscow region primary market due to the growth of effective demand, on the back of mortgage conditions improvements, and lack of new construction. This means that those people who were unable to meet their demands on the primary real estate market will look for the re-sale objects in Moscow and its regions,’ she explained.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.