Resale sales may decline by 20% after key rate hike

The share of transactions for the purchase of secondary housing in Russia fell to a record low in October and amounted to 34.5%. Against the backdrop of the Central Bank raising the key rate to 15%, sales are likely to decline further, which will push prices for secondary housing down, market experts say.

In the near future, stagnation can be expected in the secondary housing market, noted Yan Feldman, Marketing Director of Lenstroytrest Group of Companies. According to him, the new rates will be too high for a number of potential buyers, which will force them to postpone transactions.
“Of course, an increase in the key rate will affect the secondary housing market, since mortgages here are not subsidized. Rates under market programs will exceed 15% and will be prohibitive for many buyers. It can be assumed that the volume of transactions with this level of rates will be reduced by 15-20%,” the expert believes.

Following this, we can expect a decrease in prices on the market, Feldman emphasized. In his opinion, this will also affect sales of apartments in new buildings.
“The greatest discount will be observed for apartments whose owners are interested in urgent sale. Since the markets for secondary and primary real estate are interconnected, with a reduction in demand for finished housing, the “primary” property will also suffer over time. It will be difficult for people to sell their existing housing at an adequate price in order to buy a new one,” the specialist explained to Petersburg Expert.

Meanwhile, you shouldn’t expect prices to rise “immediately,” notes Ekaterina Lisovskaya, commercial director of the ADAURUM company. According to her, the increase in the Central Bank’s key rate is a process that will not change the value of the secondary market at once; we are talking rather about a prolonged effect. Moreover, prices for secondary housing may not only not fall, but may even rise, the expert believes.

“It is unrealistic to predict a decrease in the value of secondary goods with a probability of 99.9%, because it is worth taking into account both the fact of currency fluctuations and the fact that there are always two people in a transaction — a buyer and a seller. Both will experience difficulties. Therefore, the main thing is that owners should not raise prices out of excitement. This scenario is also possible,” emphasized Ekaterina Lisovskaya.

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