'The hype is likely to subside' — whether it'll be possible to contain price growth for Kazan primary housing
The ministry of construction of Tatarstan assessed the current situation in the residential real estate market and shared forecasts
Tatarstan is preparing a serious groundwork for new buildings in order to exceed the annual plan — the large-scale goal to approach the bar of 3,6 million square metres of housing a year is ahead. It is necessary for the republic to reach this indicator in order to fulfill the task set by the president to increase the volume of housing commissioning. This was announced at a round table discussion in the ministry of construction of the republic by Deputy Minister Ilshat Gimayev. Other participants of the meeting: representatives of banks, developers and realtors told how the housing market survived the past year, what caused an explosive increase in prices, and what prospects are open to the preservation of the programme of preferential mortgages. Read the details in the material of Realnoe Vremya.
“We are going to outperform the plan”
“The past year has been a very difficult period for all sectors of the economy," Ilshat Gimayev, the deputy minister of construction, architecture and housing of the Republic of Tatarstan, began his speech. “The construction sector is no exception in this regard. But we passed the test with flying colours. Just for a couple of days there were hitches associated with passes and transport checks, the delivery of construction materials to the objects. But we got our bearings very quickly and got back to work.”
The volume of construction in 2020 exceeded the same figures for 2019. The republic commissioned more than 2,68 million square metres of housing, works were carried out for a total amount of almost 370 billion rubles.
“This year, we set a task to commission 2,67 million square metres," said Gimaev. “And we are going to slightly exceed the plan to remain at the level of 2020. By 2030, we are going to reach the figure of 3,6 million square metres of housing, which encourages us to make large-scale achievements.”
Preferential mortgages will revive primary market
In the spring of 2020, Russia introduced the programme of preferential mortgages at a rate of 6,5%. The new measure of state support was introduced for a limited period — it was supposed to be valid until November 1, 2020. However, on October 24 last year, the preferential mortgage was extended until July 1, 2021.
Veronika Chabrova, the managing director for mortgages at VTB Bank in Tatarstan, announced a reduction in the interest rate under the programme of preferential mortgage lending to 6,1%.
“The project was popular," said the expert. “In 2020, the bank issued 3,500 loans under this programme, which accounted for 24% of the total number of issues. By the end of the year, the monthly payment of our borrowers decreased from 30% to 25% of the family budget.”
The demand for refinancing of housing loans has also increased. This service accounted for a quarter of all loans in 2020. “People were reducing their debt burden. We have issued more than 4,500 loans under this programme," the speaker added.
Leonid Zakharov, the head of the department for working with partners and mortgage lending of the Bank of Tatarstan branch of Sberbank, said that if in 2019, the bank issued 45,000 mortgage loans in Tatarstan, then in 2020, it already issued 62,000:
“The growth is truly huge," the expert said. “The programme of preferential lending will revive the primary housing market. Following it, the secondary market also catches up.”
Deputy Director General of Ak Bars Development PLC Ruslan Sagitov called Kazan one of the most attractive regions for construction in Russia:
“If we take into account that about 70-80 per cent of all apartments are sold through mortgages, then the reduction in the interest rate has led to a huge demand for housing," he said.
Housing prices in Kazan
Due to the increased demand for housing, the price of square metres is also growing. Over the past year, the cost of a square metre in new buildings in Kazan has increased by about 20-25%. One-room apartments have become more expensive by 30%, two-bedroom — by 20%, and three-bedroom — by 10-15%. The coronavirus pandemic has also had a huge impact on the price of housing. Due to the strict anti-epidemic regime, there were a number of problems related to logistics and labour resources, as well as the search for suppliers. For example, the cost of rebar increased by 8%, while other materials rose by an average of 10-40%.
“Much depends on the location of the housing," said Ruslan Sagitov. “For example, the average price per square metre in the Svetlaya Dolina remote from the city is 100,000 rubles. And in the residential complex Moy Ritm, which is located in the city centre, one has to pay 140,000 rubles for one square metre.”
As it turned out, 30% of Kazan housing is purchased by residents of other regions. At the same time, representatives of economically quite prosperous cities and regions are interested in Kazan real estate. People from Ufa, Krasnoyarsk, and Izhevsk tend to move to Kazan.
Outlook for the future
Natalia Ilyina, the director of new buildings at the Flat real estate agency, said that in 2020, despite the coronavirus pandemic, her organisation conducted four times more transactions than in 2019. According to her, 8 of 10 clients were nonresidents.
“Who do we work with? They are mostly parents of nonresident students. Also, it is northerners: pensioners from Novy Urengoy, Norilsk, who dream of returning to the mainland or sending their children here," Ilyina said.
Young Tatarstan families are also interested in purchasing their own housing. Most often, buyers of Kazan apartments come from Almetyevsk, Nizhnekamsk and Naberezhnye Chelny. The first by demand among customers— classic one-room apartments, and the second — studio apartments. The firm third — two-room apartments of euro format. The biggest deals included between 5 and 10 apartments.
“Now we are seeing a certain decline in sales. Customers took a break," stated Ilyina.
All experts agreed that in the near future Kazan real estate will continue to rise in price, but the price increase will be contained by increasing the volume of construction.
“The hype among people will most likely subside, the planned work will begin," Ilshat Gimayev is sure.
The deputy head of the Tatarstan ministry of construction also said that at one of the meetings in Moscow they discussed the preservation of the programme of preferential mortgages:
“The support of the state has played a positive role, and the escrow accounts have confirmed their viability. Thanks to them, 50% of housing construction is carried out in Tatarstan.”