‘After a wild rise in 2020, the prices for real estate in Kazan are staying still now’

The rise in prices for residential real estate in Kazan in 2020 totalled around 20-25%, by experts’ estimates

Prices for flats and cottages in Kazan rose last year by a quarter on average. Now real estate prices “are in expectation”, the market experts surveyed by Realnoe Vremya say. Read in our report how 2021 began in Kazan’s real estate market, what those who are intending to buy a flat or house in 2021 should expect.

How prices for non-residential real estate changed

2020 was tough for the real estate market: on the one hand, people’s incomes fell during the period of strict restrictive measures, on the other hand, the state stimulated both the citizens and businesses with low interest rates. According to FLAT realty agency, in 2021, Kazan citizens have begun to prefer old houses to new builds. In January-February 2020, the agency had 84 deals in new houses, this year, it has had 72 during the same period. Over the same time, new homeowners have purchased 441 second-hand houses against 297 in 2020.

The price for a square metre in the old house market in the republic has increased by 8-12,000 rubles a year, the value of new builds has grown by 25-35,000. Antonina Darchinova, a real estate expert, the average price for a square metre in a new house in Kazan has reached 105,000 rubles.

“To compare, if we take all new build deals in 2020, we will see some 85,000 rubles per square metres on average. I think the prices won’t grow at such a high speed anymore,” she assumes. Prices for second-hand housing, by Darchinova’s calculations, have also gone up following new builds and now amount to 95,000 rubles per square metre on average.

“After a wild rise in 2020, the prices are staying still now,” President of the Tatarstan Guild of Realtors Andrey Savelyev describes his vision of the situation. He assesses that prices for new homes in 2020 increased by around 15-20%. The prices for old houses, in his opinion, augmented by 10-15% last year, and they have risen by another 3-5% since early 2021.

Marat Gallyamov, director of Etazhi federal realtor agency’s branch, thinks that there has been an upsurge this year too: one-bedroom flats have become 8% more expensive, two- and three-bedroom flats have about 4%.

“Old houses are following new builds. There has been a rise over the year in general, by 15-18%. Developers took advantage of their right to a subsidised mortgage, second-hand houses didn’t have such a right. The old home price is a market price, it is an honest price, while the price of new builds is dishonest,” Marat Gallyamov concluded.

While millennials buy small flats

Specialists of FLAT think that purchasers will choose ready housing this year. Citizens’ interest in second-hand houses is also conditioned by great growth of prices for new builds. The experts surveyed by Realnoe Vremya say there was a fall in the market of rented realty — demand dropped by 22% from January to February in 2021, moreover, there was almost no deal signed for 10 days in January.

Antonina Darchinova thinks the high prices for new builds a new market reality. “New projects are already implemented only according to escrow accounts. So it becomes unprofitable for a developer to offer lower prices when just the foundation pit is dug. It is also tough to obtain permits. All this leads to a general rise in prices,” she supposes.

The average area of a flat in new projects will be smaller, considers Antonina Darchinova. This is linked with desires to offer a product for a reasonable price amid the current high prices for a square metre: “But development as a product is quite an inert business. Current buildings were designed about a year ago, and if we have a look at the current exposition, it doesn’t really differ from last year from a perspective of the average area of a flat.”

As for the buyer, from the point of view of Antonina Darchinova, millennials occupied the market a long time ago:

“Because it is people under 40, a very active part of the audience now. They are setting the trend for a reduction in the general size of the flat, optimising layouts but increasing the meaning of public spaces, additional service of developers. Women keep holding the leadership in realty ownership, though the (subjective) ratio among people who make a decision is around fifty-fifty.”

“It will be the year of countryside real estate, not the year of new builds”

Talking about trends in the real estate market, Andrey Savelyev thinks that all indicators have shrunk now compared to 2020. However, he doesn’t consider it as a fall but a “return to normality”.

As for goals of housing purchase, Andrey Savelyev concluded that now about a half purchases are buying real estate to live in, the other half are considering this as an investment. In 2020, the ratio was a bit different — 65% versus 35% in favour of investments. Around 65-70% of the deals are mortgages, Marat Gallyamov adds.

“The number of investors has decreased, they are expecting. Those who are buying houses now mostly are purchasing a flat for themselves. Kazan isn’t an interesting city for investments,” Gallyamov supposes. Moreover, like the other experts, he notes the demand for individual housing, which gained in popularity during the lockdown.

“The number of views of country real estate on our website as well as the number of requests is three times higher than last year. This has nothing to do with the beginning of the season. People have made a conclusion since the last year. We think there will be a boom in country realty this year. This will happens because new build prices have grown by 24%. Our developers have a very good appetite, they have raised prices for new builds too much. One can already buy a house with this money. The only ‘minus’ is that it is a bit far from the city, which is at the moment stopping a huge flow of people. It will be the year of countryside real estate, not the year of new builds,” Gallyamov concludes.
By Yevgeny Khramov