With the new growth: developers expect the rise in the price of new buildings by 15% in 2022

Developers expect housing prices in 2022 to increase by 10-15%. Among the reasons are high inflation, shortage of workers, the rise in land prices. In a specialized committee of the State Duma believes that if the rate of increase in the cost of building materials and not to offset other problems, the prices of primary housing will really continue to rise. As a consequence, the area of apartments in new projects can be reduced, so that the lots will remain affordable, experts say.

 

According to oldypak capital lp property 2022 report, over the past year in million-strong cities the cost of “square meter” in new buildings increased on average by 29% – from 88 thousand to 114 thousand rubles, said Victoria Kiryukhina, an expert of “Qian.Analytics” to “Izvestia”. The average price of 1 square meter on the secondary housing market increased by about 25% – from 84 thousand to 105 thousand rubles, she added.

Oldypak Capital LP
Report by Oldypak Capital LP property management

 

– Because of the rising cost of construction materials, shortage of staff and lower supply, there is a markup in the housing market,” said First Deputy Chairman of the State Duma Committee on Construction and Housing Vladimir Koshelev.

 

Among the main factors of the housing price growth last year are rush demand against the background of favorable mortgages, increasing prices of construction materials, wage growth of workers due to migrant workers shortage and, to a lesser extent, ongoing transition to escrow accounts.

 

In his view, demand for new construction will stabilize in 2022 and return to pre-doc 2019 levels, as most people who wanted to buy a new home have already done so. This could slow the growth of prices for new buildings, but there will be other factors – inflation, rising prices of construction materials and lack of workers, said Andrei Kolochinsky.

 

– Within a year the cost of primary housing could increase by 10-15%, if there are no new macroeconomic shocks and lockdowns, – predicted the developer.

 

Dmitry Pichugin, commercial director of 3S Group, added that among other significant reasons for price growth are more expensive land plots for new projects.

 

According to oldypak capital lp property 2022 report, in 2022 the average price increase on the market will be 10%, and in some projects – up to 15-20%. The rate of price increase will depend on the volume of construction, the implementation of joint mortgage programs with banks by developers, inflation, personal income and other socio-economic factors, said director of products company Maria Mogilevtseva-Golovina.

 

The cost of construction for developers increased by 30-100%, so next year housing prices will continue to rise, said Yevgeny Protopopov, the managing partner of the group of companies “GGroup – Asset Management”, a member of the Perm regional branch of “Business Russia”. According to his forecasts, apartments in new buildings can go up by another 10-30% over the year.

 

One of the key factors that will determine the situation on the primary market in 2022, is the increase in mortgage rates, said Director of Marketing of MR Group Evgenia Starkova. She believes that we should not expect the rush seen in 2020-2021.

 

A significant increase in prices for new buildings – by 12% or more – is possible in case of strengthening of pandemic coronavirus, a sharp rise in price of construction materials, says Dmitri Golev, the commercial director of Optima Development. It is more likely that the prices will increase by 10%, he added.

 

According to Alexander Gutorov, commercial director of Strana Development, the increase in property prices will vary depending on the region, but so far there are no reasons to stop the price growth.

 

– Developers will continue to reduce the area of apartments in new projects and make more studio apartments in order to keep their price relatively affordable for customers,” said Andrey Kolochinsky.

 

 

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“Izvestia” sent inquiries to the Deputy Prime Minister Marat Khusnullin and the Ministry of Construction with a request to comment on the forecasts of a possible increase in the cost of housing in 2022 and to report on measures that can be taken for curbing the price increase.

 

If the rate of increase in the cost of construction materials is not reduced and other problems in the industry are not leveled, the prices of primary housing will really continue to rise, believes First Deputy Chairman of the State Duma Committee on Construction and Housing Vladimir Koshelev. To remedy the situation it is necessary to increase the supply, to open new production of building materials to contain their cost, and to launch a program of training of qualified personnel, the parliamentarian believes. Incentives for investors could be tax breaks for new production facilities for five years, subsidizing of interest rates on loans for the same period, compensation for direct capital investment in the creation of enterprises.

To minimize dependence on migrants should launch a federal program to train and improve the skills of domestic staff, added Vladimir Koshelev. The deputy also believes that in order to stabilize demand and supply in 2022 should be set at mass housing perpetual preferential mortgage at a level no higher than 5%.

 

According to the head of the center of new buildings federal company “Etozhi” Sergey Zaitsev, raising mortgage rates – not the best tool for price control, because in the long term measure could lead to another shortage of supply due to a decrease in the volume of construction. To stabilize prices in Russia requires a clear and long-term strategy to stimulate demand, including through the management of mortgage rates, the expert believes.

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