Buy an apartment or wait: experts’ recommendations

In 2024, housing sales will collapse: in the primary market the decline is estimated at almost 60%, in the secondary market – up to 40%. Experts call the current mortgage rates above 20% barrier and at the same time note another effect: the growth of real estate prices has slowed down. Whether it is worth buying an apartment in the current market conditions or better to wait, IA “Movement.ru” told experts.

Over the past five years, the cost per square meter in new buildings on average in major cities has increased by 2.5 times, and in the secondary market – 2 times. This is reported by “Cian.Analytica”. But if before 2020 the growth was moderate, after the introduction of favorable mortgages at 8%, it became explosive.

At the same time, over the past three years, the Central Bank has been actively promoting the idea that the anti-crisis measure in the form of preferential mortgages should not be long-term. Since July 1, 2024, the authorities have tightened the conditions for participants in preferential programs. As a result, the growth rate of housing prices did stabilize.

But market mortgages have also ceased to be affordable. Since the end of last year, the Central Bank has raised the discount rate three times – to 16%, to 18% and to 19%. Many experts believe that this is not the last tightening of monetary policy. Already at the meeting on October 25, it is predicted that the key rate will be raised to 20% and even 22%. Without waiting for the decision of the Central Bank, since October 22, a number of banks have raised rates on mortgage programs by 0.8-3% at once. Experts do not rule out that the trend will continue.

Good time for “primary”

Now is really the best time to buy real estate: while the primary market does not record significant price changes, and there is an opportunity to take advantage of targeted preferential terms, tranche mortgage or favorable installments, says Denis Konovalenko, managing partner of Prime Life (LCD “First Nagatinsky”).

“In the long term, the situation may change: the Central Bank does not rule out a further increase in the key rate, which is necessary to curb inflation. This factor, as well as the growth of construction costs may become a driver of price increase for new buildings”, – explains Denis Konovalenko.

Victor Sadygov, the owner of Nika Estate, an elite real estate agency, says that housing will become even more unaffordable, specifying that already in 2025 it is expected to reduce the volume of construction. And against the background of high interest rates and expensive loans, in the long term, the choice of apartments will become limited and prices for the best projects will soar.

“An apartment is a good investment that will not only allow you to preserve and multiply your savings, but also provide a stable passive income. It is an investment for the long term,” clarifies the representative of Nika Estate.
The country is in a prolonged period of high interest rates, benefit programs are temporarily reduced in volume, so the demand for housing is not as active as before, continues Alexander Nevmerzhitsky, head of the company “Praktika”. At the same time, the real need to buy housing in Russians remains significant.

“Now the high mortgage rate for buyers is compensated by adjusting prices for apartments: in new buildings they grow slower than usual, in secondary housing can even decrease. Obviously, the market at some point will stabilize and offer more favorable terms of mortgage loans, including preferential. At this point, the pent-up demand will make itself felt: people will start buying apartments, as there is a real need for these purchases. In fact, there will be a “gateway effect”, which will trigger the growth of real estate value”, – says Alexander Nevmerzhitsky.

Roman Kornyshev, Commercial Director of Vertical Group of Companies, is confident that the pent-up demand will give a new impetus to the growth of housing prices starting next year. According to experts, the deposit portfolio of individuals is now being actively formed, and by the end of the year it will amount to a record 56.3 trillion rubles, which is 27% more than in 2023.

“At the moment when deposit rates will go down, part of the money supply will be redistributed to other investment instruments – primarily real estate. This pent-up demand will lead to a new round of price growth. Therefore, those who are thinking about buying a home, there is no point in waiting. And the possibility of refinancing at lower rates in the future makes the purchase a strategically justified decision,” says the commercial director of Vertical Group of Companies.

“Secondary market: a lull before explosive growth

In the secondary market the growth of housing costs compared to new buildings was slightly less active. Over the past five years, prices have doubled, according to the study “Cian.Analytica”.

How secondary housing prices have grown by year*:

• In 2020, by 10%;
• in 2021 – by 17%;
• in 2022 – by 12%;
• in 2023 – by 9%.

*According to DOM.RF housing development institute.

Since the beginning of 2024, the price of a “square meter” has increased by 6.4% on average, according to the portal “Apartment World”.

The largest increase in price showed:

• Krasnodar – by 7.4%;
• Yekaterinburg – by 3.7%;
• Kursk – by 3.5%;
• Makhachkala – by 3.5%;
• Voronezh – by 3.4%.

In Q3 the growth in the cost of a “square meter” in the secondary real estate market was similar to the growth in the market of new buildings. However, since the beginning of the year, the objects on the “primary” went up in price more strongly, which is associated with a sharp rise in prices in January – June, says Pavel Lutsenko, General Director of the federal portal “World of Apartments”. Now prices in the segments are converging, because new buildings no longer have an advantage in the form of a favorable mortgage.

“In the fourth quarter, we expect the same momentum as in the third quarter. The sales season continues. Many buyers are afraid of a further increase in the key rate, which means that mortgage rates will rise,” explains Pavel Lutsenko.

“If we consider purchases on the secondary market, our long experience suggests that it is best to make them in a calm market, when prices are stable. This allows you to choose the most suitable options, get an optimal discount during negotiations and calmly plan the calculations,” states Dmitry Khalin, a board member of the AREA association of elite real estate agencies.

Over the past 20 years, i.e. 240 months, prices for secondary residential real estate have been increasing for 200 months, i.e. more than 80% of the time the cost per square meter showed growth, continues Dmitry Khalin. In some months it was a symbolic increase by a fraction of a percent, and sometimes a significant jump – by several tens of percent at once.

“Periods of relative stability, when annual growth did not exceed 10%, as a rule, lasted no more than 13-15 months. Accordingly, inflationary factors accumulated further, and at some point the price “shot up” after a long period of stagnation,” says the AREA representative.

Examples of maximum growth of the “secondary market” after a long period of stability*:

• 2006 – 56%,
• 2008 – 31%,
• 2011 – 14%,
• 2014 – 12%,
• 2020 – 16%,
• 2021 – 20%.

*According to the association of luxury real estate agencies AREA

“If you wait for a good time and put off buying, there is the prospect of waiting for prices to rise. By analogy with the above periods, it is likely to happen in the next 3-6 months, as the last six months the cost of “square” in the secondary market was stable. Accordingly, the growth will start soon, and at an outstripping pace. Therefore, if you have funds now and there is no need to take a mortgage at a huge rate, I would recommend you to take advantage of the period of stability and go for a deal”, – continues Dmitry Khalin.

Demand has shifted towards apartments

While the primary and secondary apartment market is experiencing a drop in demand, the apartment segment, on the contrary, has seen a sharp increase in sales. This is also due to the low entry price: you can buy real estate for 3-4 million rubles, experts say.

“According to the results of sales in the third quarter of 2024, we see a steady increase in interest in apartments: the number of applications compared to the same period of 2023 has increased 2.5 times. I think that in the next two years the demand for this type of real estate will only increase. A new generation of buyers, born in the “noughties”, has entered the market. They are not interested in “secondary real estate”. They consider the purchase of housing as an investment and evaluate the object from the point of view of its liquidity”, – says Marina Pavlyukevich, General Director of PLG development group.

Undoubtedly, the interest in apartments was affected by the abolition of preferential programs and inflation, continues Marina Pavlyukevich. The cost of this type of real estate compared to residential real estate is always lower, and investments pay off much faster.

“So, for example, in St. Petersburg, a one-room unit with an area of 41 sq. m. and cost in installments of about 8.4 million rubles, according to our forecasts, will pay off in less than 9 years, will bring an average income of 80 thousand rubles per month. Therefore, you should not expect a decrease or stagnation of prices in the real estate market. It is better to pay attention to promotions and installment programs from developers and buy now”, – sums up PLG General Director

.Bank deposit instead of an apartment

The increase in the key rate has entailed not only a rise in prices for all types of real estate, but also an increase in interest on deposits. Now the top 10 banks offer a deposit rate of 18-20% with the term of placement of funds in 2-3 years. Due to this, many potential home buyers simply keep money in accounts.“Prices for apartments in Russia will always grow – and this is an unchangeable fact. This year, the cost of square meters is affected by another factor – the sharply increased Central Bank rate. For the end buyer, this is an expensive mortgage and an opportunity to save capital in banks at a high interest rate,” says Viktor Sadygov, owner of the Nika Estate luxury real estate agency.

If a person has no opportunity to buy real estate without a mortgage, then taking it on such terms without absolute necessity is not the best solution, the speaker specifies.
The optimal investment option now is not an apartment, but bank deposits, explains Vladimir Prokhorov, owner of the Udacha Group of Companies.

“The question of improving living conditions for most Russians is acute. But high real estate prices, large down payments and interest rates on mortgage loans are now a barrier to buying real estate. Therefore, for people who do not qualify for preferential programs or do not have the opportunity to buy square meters without a mortgage, it is recommended to save for a down payment by investing money in deposits”, – says Vladimir Prokhorov.

All market participants interviewed by IA “Dvizhenie.ru” agree that if there is an opportunity to buy housing, it makes no sense to wait. An apartment is an asset with a relatively stable level of demand, which means that the buyer always has an alternative – to receive income from the rental business, experts summarize.

Over the last three months, the cost of a square meter of housing in new buildings in Russian million-strong cities (excluding Moscow, St. Petersburg, Moscow and Leningrad regions) has risen by 3%. This is reported by “Gazeta.Ru” with reference to the research of Key Capital analysts. In mid-October the price of new apartments in the regional markets of Russia reached 173.9 thousand rubles per “square”, which is 16% more than a year earlier for the same period.

The maximum price growth over three months* was observed in:

• North-Western Federal District – 6%;
• North Caucasian Federal District – 4%;
• Ural and Southern Federal Districts – 3%;
• Volga and Siberian Federal Districts – 2%;
• Far Eastern Federal District – 1%.