A square meter for a million: how mortgages made housing unaffordable even in the regions

The primary real estate market in megacities has become hostage to the high key rate. Against the backdrop of rising mortgage overpayments, the cost of a square meter in 10 of the 16 largest cities in Russia has exceeded 1 million rubles, and in Moscow it has approached 2.1 million. This was a consequence not only of expensive loans, but also of the duration of the mortgage loans themselves - an average of 27 years. As a result, buying a home has become a privilege only for the wealthiest minority. Against this backdrop, interest in preferential programs remains, in particular, in the "Family Mortgage", which, despite rumors, continues to apply to both new buildings and the secondary market in regions with a low level of construction. But will this help many Russians with housing issues?

The cost of a square meter in a new building has long gone beyond simple arithmetic. If you take out a loan at a market rate, which is currently around 25% per annum, and pay it off over 27 years — as many do who have no other choice — then the final amount is twice or even three times higher than the initial price. In Moscow, a square meter will cost 2.1 million rubles instead of the starting 316 thousand. In such megacities as Ufa, Yekaterinburg, Krasnodar, Omsk, Perm and Novosibirsk, the price exceeds 1 million. Even in Volgograd, where housing is considered one of the cheapest in the country, the final cost of a square meter is close to 716 thousand rubles.

What to do if money is "expensive", demand is falling, developers are losing profitability, and the purchasing power of the population is weakening? Real estate market expert, author of the "Economism" project Alexey Krichevsky told MK about this.

— Mortgages in Russia remain prohibitively expensive. What factors are keeping market mortgage rates at 25%, despite the Central Bank's statements about a reduction?

— Essentially, there is one factor — the key rate. It is currently at a level (20%) that can be considered overwhelming for the real estate market. Yes, the banks have loosened their grip a little — the 1% reduction in the “key” in June seemed to have been beneficial, but it is a drop in the ocean. The Central Bank says that by this step it has protected the economy from excessive monetary policy strictness, but for a mortgage borrower there is almost no difference. It’s simple: the “key” plus 3–5% — that’s the current rate. No add-ons — macroprudential limits, risk premiums — play a special role now.

— What consequences could such a high final cost of housing have for demand and developers?

— Demand has already dropped. For example, in May, sales of new buildings in old Moscow fell by 41% compared to last year. In New Moscow — minus 33%. In Russia as a whole — a drop of 41.2%. These are not just numbers — they are a clear signal. There are several reasons: firstly, the preferential mortgage period has expired, and the Ministry of Construction has not succeeded in extending it. Secondly, Moscow has banned the construction of apartments smaller than 28 square meters, which has reduced the available supply. Thirdly, purchasing power is not growing: people’s real income has not increased, inflation in the consumer segment is very high. All this leads to a natural cooling of the market. There are already cases of bankruptcy of regional developers — especially in cities like Vladimir, Rostov and others. The model is not holding up: there is no demand, sales are at a standstill, leverage is pressing.

— The Ministry of Finance recently confirmed that the “Family Mortgage” will continue to operate until 2030. To what extent can such preferential programs smooth out the situation?

— If we take the program in its current form, it is not a panacea, but a certain buffer. Especially if measures are introduced whereby a loan can only be taken in the region of registration, this could support local developers. But again, we should not expect miracles from this. Rather, we will see cases where people will register fictitiously in more “expensive” regions, for example, in Moscow or St. Petersburg, in order to get a mortgage at a low rate and buy liquid housing. That is, there will be few real improvements for the regional market.

— Could the expansion of preferential programs, including the admission of secondary housing, somehow change the price dynamics?

— It works, but only in a targeted manner. The expansion of family mortgages to the secondary market is happening in those cities where there is almost no construction. And, as a rule, these are places from where young people leave for regional centers. An apartment in Nizhny Novgorod and an apartment in Bogorodsk are completely different investments, and the market understands this perfectly well. The developer will also not go to build in a place where it is difficult to sell. So there will be an effect — but not where it is especially expected. This is more a measure of support for small cities than a factor capable of reversing the overall dynamics.

…Thus, behind the promises of lower rates and extensions of programs, there is a tough market where opportunities are limited and resources are running out. With the current configuration – expensive money, long loans and weak demand – housing is moving further and further from the category of “basic need” to the category of “debt luxury”. For now, the only anchor for the stability of the market remains preferential programs, but they are increasingly working as a means of point stabilization, rather than as a market driver.