After more than doubling in 2006, real estate prices stabilized in 2007, rising by about 12 percent, on par with inflation. In 2008, they are expected to go up 15-20 percent in dollar terms and 10-15 percent in rubles (1-2 percent a month).
According to realtors, Russia's real estate market was not affected by the US mortgage crisis. "The market statistics show that the level of mortgage loans is not declining. For our company, it jumped 10 percent in November," Dmitry Taganov, chief analyst at Incom Corporation, said in the In Focus program on RBC TV. He said banks were taking a tougher line on borrowers, shunning those without a credit history.
Taganov believes that market growth in 2008 will be determined by a predictable political situation in the country. Parliamentary elections were in line with expectations, and there's little doubt about the outcome of the presidential vote.
Under a pessimistic scenario, the global liquidity squeeze will affect Russia's real estate market in the spring of 2008. However, experts say demand for housing in Moscow will remain high, and prices will not drop below a certain level. To the contrary, they will double over the next few years.
Meanwhile, demand is shifting towards higher-quality flats. Over the past few months, demand for old apartments has declined significantly, and a lot of new flats have been purchased using mortgage programs. There is an opinion that there is not enough space for construction in Moscow. Experts think the problem could be solved by moving into industrialized areas and suburbs, within 10km from Moscow. Within 60-100km from the city, housing prices are 50 percent lower.
The development of Moscow's real estate market will focus on secondary housing market rather than on new buildings. The city's secondary market is estimated at about 37,000 building. "This is about 1 percent of Moscow's entire housing resources, or about 3 million apartments. This means that the secondary market has a huge potential," Taganov concluded.