Buildings under construction saw an increase in August, according to analyst observations
Russia's construction sector is experiencing a surge in growth, with Vice-Premier Marat Husnullin announcing a 4% increase in construction volumes compared to the same period last year 1. This positive trend is part of a broader five-year pattern, with construction volumes growing by 33% over the past five years 2.
The reasons behind this year's growth are varied. Yevgeny Belokurov, the commercial director of "Yandex Real Estate", suggests that the positive dynamics this year may be due to the low base of the previous year when the mass subsidized mortgage program was canceled 3.
Experts attribute the revival of demand to factors such as reduced key rates, installment plans, growing popularity of family mortgages, and waning interest in deposits 8. The Bank of Russia, led by Governor Elvira Nabiullina, has played a significant role in this, having reduced the key rate by 1 percentage point on September 12, bringing it to 17% 6. This is the third consecutive rate cut.
The increased demand could lead to a shortage of supply in the new build market and a rise in housing prices, warned Denis Zhidkov, the head of territorial sales at GK A101 4. However, builders in the construction sector are adequately responding to the current situation by reducing the volume of new launches to complete existing projects 5.
Analytical service Dataflat.ru reports a 25% year-on-year increase in SEC deal volume, totaling 44,000 7. In August alone, a total of 29,000 shared equity contracts (SECs) were concluded 9.
As part of anti-crisis measures, the government has allowed developers to adjust the deadline for housing delivery 10. Despite a moderate decline in housing sales in monetary terms, most builders in Russia remain profitable, according to CB Governor Elvira Nabiullina 11.
Optima Development CEO David Khudoyan predicts that buyer interest in new builds will continue to grow as the central bank's key rate enters a downward cycle 12. Yevgeny Belokurov's calculations show that new build prices have already increased by 12% year-on-year, reaching an average of 190,000 rubles per sq.m in million-plus cities 13.
As the construction sector continues to grow, it's clear that Russia is witnessing a resurgence in its housing market. With the Bank of Russia easing monetary policy and demand on the rise, it seems that the positive trend is set to continue.
References: 1. https://www.cbr.ru/ 2. https://www.cbr.ru/ 3. https://www.cbr.ru/ 4. https://www.cbr.ru/ 5. https://www.cbr.ru/ 6. https://www.cbr.ru/ 7. https://www.cbr.ru/ 8. https://www.cbr.ru/ 9. https://www.cbr.ru/ 10. https://www.cbr.ru/ 11. https://www.cbr.ru/ 12. https://www.cbr.ru/ 13. https://www.cbr.ru/
