In recent months, the residential real estate market in Belarus has been showing increased activity – there are statistically a lot of deals for the purchase / sale of apartments, prices after the fall have reached a plateau. What contributed to the revival and what to expect by the end of this year? Are there factors conducive to a sharp drop in prices? Natalya Litovskaya, an expert on the residential real estate market, reports.
– After the presidential elections in 2020, real estate analysts gave very different forecasts for the development of the situation: from pessimistic (construction projects will stop, prices on the “secondary housing” will fall to historical lows) to optimistic (the dollar rate will stop growing and apartment prices in currency terms will fall slightly ).
A moderate scenario was also considered, when new buildings will turn into long-term construction, and the average price per square meter in the capital will reach the psychological milestone of $ 1000.
Apparently, the optimistic scenario wins. Let’s see what trends have formed in the residential real estate market as of mid-July 2021.
What’s happening in the housing market this summer
1. The number of offers is more than high.
In quiet years, the market offered buyers a choice of about 7-8 thousand apartments in Minsk. The number of residential properties for sale has been growing since the spring of 2020. The peak was recorded in the spring of 2021 – more than 16 thousand proposals (hereinafter, Realt.by data is given). Now the number of objects put up for sale is about 12.6 thousand – over the last month their number has decreased by 4%.
It is important to make a reservation: the base of advertisements for the sale of secondary housing has been replenished and is being replenished not only at the expense of sellers of secondary real estate, but also at the expense of offers in houses of “Minsk-World” (every fifth advertisement). These houses are advertised as finished, even if the ad itself says the deadline is 2023. But even if we subtract the variants of “Minsk-World”, the supply on the market is above the average values for the capital.
2. There are enough deals.
The standard number of transactions in Minsk is 1000-1100 per month. This spring and early summer, according to the National Cadastral Agency, there were 1,200-1300 of them a month. From 15% to 30% in different months were transactions with apartments in finished and commissioned new buildings.
If immediately after the presidential elections in 2020 no one bought anything, the autumn was very sluggish in terms of activity, then the resumption of lending, a decrease in housing prices and rumors that foreign currency deposits could be given in rubles after the summer pushed citizens to resolve the housing issue.
As a result, in the first half of 2021, the number of apartments sold exceeded the level of the first six months of 2020 by 16%.
3. The average price per square meter in real transactions has reached a plateau.
Prices have been declining since last summer, but rather sluggishly. For example, the average offer price in the secondary market a year ago was $ 1391. Now, according to the Realt.by portal, excluding Minsk-Mira apartments, the average price of a square meter in Minsk has dropped to $ 1328. At the beginning of the year, this figure was $ 40 more.
The average price per square meter in real transactions as of May is $ 1295. Actually, at the level of $ 1300 plus / minus $ 20, the average price in real transactions has been holding for several months.
Economists explain the plateau by the return of lending in the secondary housing market.
4. Lending disappeared and then returned.
At the beginning of 2021, Belarusbank returned the possibility of obtaining a loan for the purchase of secondary housing for individuals. Recently, similar proposals were made by several more banks that provide short-term loans. Interest rates on these loans are high (Belarusbank now has 20% per annum), but even this supported the market. Those who did not have enough money last year are in a hurry to prove themselves for $ 5-10 thousand (taking into account the fact that house prices have dropped since last year). Now they have managed to dig in and, thanks to the loan, finally solve the housing problem.
Affiliate lending programs, which disappeared and returned in a more rigid format (shorter terms, higher rates, more claims on the borrower), supported the sale of new buildings.
5. The rental housing market is also a plateau.
The number of properties offered for rent is growing steadily. In the Realt.by database at the beginning of this year there were 3 thousand offers, now there are more than 10 thousand, despite the fact that not all apartments for rent fall into this database.
The average rental price says little: when supply exceeds demand, the landlord has the right to vote and bargain. As a result, those apartments are rented, the owners of which are ready to make concessions, the rest remain on the market waiting for the tenant. The current situation is a groundwork for further price reductions, even if there are no force majeure circumstances, for example, in the foreign exchange market.
Should we expect a fall in prices by the end of the year?
As we have already said, in the real estate market, everything is proceeding according to an optimistic scenario: the dollar rate has not yet grown significantly, and there has not been a sharp drop in prices in all segments. The decline in prices is going on, but very, very slowly.
How will the market behave in the next six months? It is influenced by three main factors:
- Population income in currency terms
- Availability of loans
- General mood.
It is difficult to predict what will happen to the mood. Who a year ago would have thought that there would be a hypothetical threat of restrictions on foreign exchange transactions, because of which some citizens would rush to convert currency into concrete meters?
Devaluation again ?! Do I need to be afraid of new currency restrictions and run to exchange offices
New rules of foreign exchange regulation in Belarus – what business needs to know
Similarly, we do not know how those who think about improving their living conditions will react to the socio-political situation in the future. What force majeure can change the mood of Belarusians in a week, a month or three?
It’s clearer with income: they will definitely not grow in currency terms. It is not the state of the economy that wages rise, but inflation is obvious to anyone who goes to the grocery store.
With loans it becomes clear: they will become less and less accessible, as has happened more than once as the crisis deepens. Fortunately, starting from July 21, it is possible to increase the price of loans without the approval of the regulator – the National Bank raised the refinancing rate to 9.25%, and the rates on loans for both secondary housing and new buildings are tied to it.
These factors will continue to put pressure on demand and prices, moving them smoothly downward. But for the next six months, there are no factors that can significantly accelerate this decline. Even if the demand for housing falls to the sad figures of last autumn, the market, due to its inertia, will react to it with a delay of two to four months, or even six months.
And it’s hard to look further.