Analyst Repchenko: Russians still have loopholes to buy apartments in new buildings cheaper

The completion of preferential mortgages did not lead to lower prices for apartments, as expected. On the contrary, housing continues to rise in price. However, as Oleg Repchenko, head of the analytical center Real Estate Market Indicators, told Rosbalt, buyers still have the opportunity to buy an apartment cheaper than the market offers.

“After the end of preferential mortgages, developers, together with banks, began to subsidize mortgages themselves. Some subsidize rates for the first year or two, others for the entire term of the loan. This policy allows developers to keep sales at the same level, so the market for new buildings has hardly noticed an increase in rates,” the expert noted.

For the buyer, according to Repchenko, a mortgage with a reduced rate means a reduction in the cost of housing. “The price formally remains the same, but a person saves on servicing a loan. Subsidizing the rate by 3% is equivalent to a discount of about 16%, and 4% is about 22%,” he said.

For developers, subsidized mortgages are all the more profitable, because they allow not only to keep prices at the achieved heights, but also to continue to raise them, the analyst says. “Subsidizing mortgages by 1% roughly corresponds to 5-5.5% of the cost of housing. That is, the developer, having reduced the rate by 1%, can raise prices by 5%. The buyer does not care how much the apartment costs. It is important for him how much he will pay monthly. And the amount of monthly mortgage payments with subsidies remains the same. As a result, we are seeing a surreal picture on the market: demand is stagnating, there are practically no buyers with money left, and prices are rising. In fact, this scheme allows developers to keep prices at high levels in an artificial, non-market way,” Repchenko notes.

How long this situation can last is unclear. According to the analyst, it all depends on whether the Central Bank will continue to raise rates.