Average cost of 1 sq. m of secondary housing in the Russian Federation reached 121 thousand rubles

The average cost per square meter of secondary housing in Russia increased by another 0.7% over the month, exceeding 121 thousand rubles. Leading analyst of the federal company Etazhi, Alexander Ivanov, told Izvestia about this on February 4.

“The market is behaving differently than during periods of high mortgage rates in years past. The availability of mortgages for secondary housing has decreased, there has been a partial cooling of demand, but at the same time the average price per square meter has not decreased, but, on the contrary, continues to grow,” he said.

Moreover, as the expert noted, the average level of bargaining during the sale of finished housing (the difference between the offer price and the actual sale price) has remained virtually unchanged. If last month sellers on average made a discount of 4.1%, then this month it increased to only 4.2%.

“Usually the market reacts quite actively by increasing the average trading level to any risks of decreased demand. This was the case in the spring of 2020 at the height of the pandemic, when the average discount on the sale of secondary housing grew to 5.6%, then from May 2022 to January 2023, buyers switched to new buildings due to near-zero rates and the average level of trading on the secondary market was at range 5.4–5.9%. Since the beginning of 2023, the Central Bank has limited near-zero mortgage rates for new buildings, buyers returned to the secondary market and the average trading level dropped to 3.9% by October 2023,” the expert explained.

Now the market is reacting to the decrease in the availability of mortgages for finished housing, on the contrary, by continuing to rise in prices. According to Ivanov, this may be due to the “price” gap between finished housing and new buildings – the owners are not ready to sell their property cheaper because they are worried that they will not be able to find a suitable option for new housing or, with a discount, they simply will not have enough money for repairs in new apartment.

“The most correct option now is to focus on the sale period. If it makes sense to urgently sell an object, bargaining with the buyer is inevitable. Properties with urgent sale are now the most attractive for purchase, since the discount offsets the overpayment on the mortgage,” Ivanov advised.

Earlier, on January 31, the federal company Etazhi told Izvestia that the average approval rate for soft loans in the primary market in January of this year dropped to 59%.

Deputy Head of the Mortgage Department at Etazhi, Tatyana Reshetnikova, also noted that banks are becoming more and more selective when choosing borrowers, which is affected by both the limited limits on preferential programs and the reduction in the amount of compensation to banks from the state. Increasingly, banks are placing higher demands on borrowers’ income and its confirmation, as well as on the size of the down payment.