Apartments in Kazan rise in price more than in Crimea

Growth rate of prices in the primary housing market has been measured in Russia

Kazan is among the top five Russian cities where the price of a square metre of housing has risen the most in three years. Together with the resort of Sochi, Balashikha in Moscow Oblast, Kaliningrad, and Ulan-Ude, the Tatarstan capital leads the country by this indicator, a “square” for the specified period rose by 45,89%, SRG analysts calculated. Realnoe Vremya turned to the official statistics on monitoring the cost of new buildings in the regions of Russia, to the data of Rosstat, and compared the figures with the data of other aggregators. In Tatarstan, apartments turned out to be the most expensive in the Volga Region in the first quarter of the year, and the price of a square metre Kazan is ahead of even some resort regions.

Eight-fold difference in average prices

In Russia, the growth of housing prices was measured in the first quarter of the year. As a basis, we took the average market prices for apartments, which, depending on the region, may differ by 8 times. For example, the most expensive new buildings are, of course, in Moscow — 251,800 rubles a square metre, the cheapest — in Kabardino-Balkaria — 31,9,000 rubles a square metre.

According to Rosstat, real estate has risen in price throughout the country from 71,500 to 83,200 rubles (+16,3%). The maximum increase — in the Yamalo-Nenets Autonomous District — by 59%, from 69,900 to 111,100 rubles.

Also, almost by 35%, the price of the primary housing market in Adygea increased significantly — from 38,900 to 52,500 per square metre. The third in terms of growth is Moscow Oblast (+32,9%), where housing increased in price from 88,400 to 117,500 rubles.

In the capital of the country, the cost of housing for the year increased by 17,5% (from 214,300 to 251,800), in St. Petersburg — by 28,5% (from 152,600 to 118,700).

The Kabardino-Balkar housing market is not only the cheapest, but also did not grow much in price — it added only 7,8% (from 29,700 to 31,900).

However, against the background of the general rise in the cost of construction, there were regions where apartments, on the contrary, became cheaper. Among these — Sakhalin Oblast (-10,6%), where a square metre fell from 122,900 to 109,900 rubles.

Tatarstan and Kazan are the leaders in the Volga Federal District in terms of prices

In our republic, the most expensive real estate is in the Volga Federal District. For the year, it rose by 26,2% (according to Rosstat), from 69,900 to 88,200 rubles. The price of a square metre of housing in Tatarstan exceeds the average value for the Volga Federal District by 24,800 rubles.

The republic is ahead of even the southern resorts of the country in terms of the cost of new buildings, such as Crimea — 74,000 rubles/sq. m (+13,2%), the city of Sevastopol — 86,600 rubles/sq.m (+20,9%), Krasnodar Krai — 63,100 rubles/sq. m (+21,8%).

In terms of percentage growth, Tatarstan ranks second in the Volga Region after Perm Krai (+29,9%), where a square metre rose from 51,300 to 66,600 rubles.

According to the most recent data (as of May 2021) from the DomClick service, the cost per square metre in our republic is 92,200 rubles. At the same time, a year earlier (May 2020), such real estate cost 79,000 rubles. An increase of 16,6%.

In Kazan, it is a more rapid growth over the year (42,3%). The average price per square metre in the capital of Tatarstan in May 2021 was 121,900 rubles per square metre, while a year earlier it was at the level of 85,600 rubles.

According to this aggregator, Kazan ranks first among the capitals of the subjects of the Volga Federal District in terms of price growth (+42,3%) for primary housing. In terms of the absolute value of the square metre, our city is also the leader in the district.

“An increase up to 100%"

The president of the Guild of Realtors of the Republic of Tatarstan, Andrey Savelyev, confirmed that the prices “have increased very much, significantly”. According to his estimates, the growth was about 20%:

“Prices for primary housing are now in the corridor from 90-95 to 120-130 thousand rubles per square metre depending on the construction stage. At the initial stage — 90-95 thousand rubles, at the final stage — 120-130 thousand rubles per square metre, respectively.”

Olga Volchkova, the director of Gran Development Specialised Developer PLC, said that the price per square metre on the market now varies from 100 to 200 thousand rubles, depending on the level, type of project, its content.

Andrey Savelyev believes that the data in aggregators and Rosreestr fluctuate very much. In his opinion, they cannot give an objective price:

“There are objects that have grown by 100%, and there are objects that have grown by 5%. For example, luxury real estate either did not increase in price at all, or showed an increase of about 5%. The economy class of suburban real estate showed an increase of up to 100%. The average statistics in the primary market of Kazan is about 20-25%.”

According to Antonina Darchinova, a real estate market expert, there was no significant price increase in May 2021. Most of May turned out to be non-working, which reduced business activity and sales figures for many developers. However, at the end of the month, there was some recovery. According to the expert, the increase in average indicators is due to that new, higher-quality projects are entering the market with a more expensive offer, and cheaper lots in old projects are gradually washed away.

Olga Volchkova also confirms the concept of high-quality construction: “Developers are trying to bring a high-quality product to the real estate market, which has certain features of internal filling of space for creating a lifestyle. All the high-quality materials that we use now, in the market, taking into account the instability of the ruble and building materials, are expensive. Unfortunately, it is impossible to achieve a high-quality product in any other way. Therefore, we have decided for ourselves that we will build a high-quality product, so we are going to increase the cost.” At the same time, the increase in prices, according to the expert, was due to the increase in construction costs:

“The cost price has increased very much, so taking into account the compensation for the cost increase, we are increasing the cost per square metre. It all depends on how much you invest in the project. If you invest a lot — the cost price increases. Naturally, the price of implementing interesting projects increases. In fact, the developer's profit does not increase as a result of the project.”

However, as the expert noted, the growth of materials continues. “The metal has doubled," Olga Volchkova complained.

Speaking about the current situation, Andrey Savelyev optimistically stated that in 2021 the price growth has stopped:

“They're not growing now. They grew in the period of 2020. Suburban real estate continues to grow even now, and primary real estate is not.

He added that “prices will definitely not decrease”. The expert suggested that in the context of high competition, in market conditions, some developers will announce promotions: something like “a balcony as a gift”, “every thirtieth metre is free”. Such a discount is a veiled reduction.

“There will be no official price reduction. Prices will only grow," the head of the guild concluded.

To stabilise prices in the housing market, Olga Volchkova considers the stagnation of prices for building materials a necessary condition: “If the cost of materials at least falls down, then prices stagnate. I don't think there will be a decline in value, but there will be price stagnation.”

Antonina Darchinova is also sure that real estate prices will not decline, saying that there are still prerequisites only for growth:

“This is due to a reduction in the supply of new buildings compared to last year. But I don't think growth will be galloping again like it was last year. The purchasing power of the population is not growing, and this is constraining the growth.”

Should prices be regulated?

According to Andrey Savelyev, at least 50% of apartments on the primary market are bought for the purpose of investment. Two-thirds of all apartments are at least bought under mortgage.

However, Olga Volchkova believes that now the number of investors has decreased. The majority (about 85-90%), in her opinion, take housing for their own living. At the same time, mortgage purchases account for about 80% of all transactions.

Antonina Darchinova also believes that investment demand has decreased compared to 2020:

“This is due to that the developers themselves, working with escrow, no longer set investment attractive prices for apartments. However, due to the low rates on financial instruments of financial savings, real estate investments are still very relevant, and when an investment-attractive product enters the market, it is in great demand.”

Tools to curb prices for apartments at the state level, of course, are possible, says Andrey Savelyev:

“But I believe that there should be a free market, it is necessary to act not on the deterrent factor, but to develop other-market factors: to build more housing.

More competition, according to the expert, will affect the price. It is necessary to encourage developers:

“If we legislate to restrain prices, it will not lead to anything good. A grey market may appear. The government should think about this, but taking into account the tools of the market.”

Antonina Darchinova also does not welcome restrictions on the cost of commercial projects:

“This may demotivate developers to offer a better product. To provide housing for citizens in need of state support, there must be and are programmes for the construction of social housing.”

By Yevgeny Khramov