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- We have a cancellation: 11 large cities are at risk due to the curtailment of preferential mortgages
We have a cancellation: 11 large cities are at risk due to the curtailment of preferential mortgages
Eleven major Russian cities are at risk due to the cancellation of preferential mortgages. In 2024, there was only one city, Voronezh. There are only two cities in the black in terms of construction and sales — Moscow and St. Petersburg. In others, this indicator has dropped over the year. The strongest were in Nizhny Novgorod — by 36%, Chelyabinsk — by 35% and Krasnoyarsk — by 32%. A further decline threatens developers with bankruptcy due to difficulties in paying off debts on project financing, industry representatives say.
In which regions is the demand for housing decreasing
A year after the cancellation of preferential mortgages, 11 major cities were at risk due to unsold housing, while in 2024 it was only one - Voronezh. This is the conclusion reached by analysts of the real estate project "Movement.<url>" based on data from the Unified Housing Construction Information System (UISWS). They studied the situation on the housing market from June 2024 to June this year in 16 Russian cities with a population of one million, adding Tyumen, which today is one of the largest real estate markets in the country.
— During this period, the volume of loans in the primary market decreased almost threefold — from 475 billion to 167 billion rubles per month, at the same time, demand for new housing decreased. At the same time, most of Russia's largest cities increased construction volumes by 10% or more, which led to a record increase in unsold space. The latter threatens developers with financial problems," says the study, which is available from Izvestia.
Thus, according to the document, an increase in the ratio of the sale of housing under construction to its construction readiness was recorded only in Moscow and St. Petersburg. In the capital, it grew by 1% over the year and amounted to 95% in general, and in the city on the Neva — by 3%, reaching 92%.
In other cities, analysts have recorded a decrease. Although it is not yet critical for four millionaires. For example, the largest decrease in sales occurred in Nizhny Novgorod — by 36%. However, taking into account the data for 2024, this indicator remained at a high level, having decreased from 146% to 110%.
Also, the situation on the housing market in Yekaterinburg is not alarming yet — a decrease of 25% (from 110 to 85%), in Rostov-on-Don — by 28% (from 113 to 85%) and Kazan — by 22% (from 105 to 83%).
At the same time, according to the study, cities where the ratio of sales to construction readiness was 70 percent or less were at risk. Volgograd was among them — minus 30% for the year (from 100 to 70%), Perm — minus 34% (from 103% to 69%), Tyumen — minus 28% (from 96 to 68%), Samara — minus 11% (from 76 to 65%), Novosibirsk — minus 27% (from 91 to 64%), Chelyabinsk — minus 35% (from 98 to 63%), Omsk — minus 15% (from 76 to 61%), Voronezh — minus 11% (from 68 to 57%), Ufa — minus 19% (from 75 to 56%), Krasnoyarsk — minus 32% (from 87 to 55%) and Krasnodar — minus 25% (from 73 to 48%).
— The incessant growth in construction volumes in million-plus cities is accompanied by a decrease in the ratio of sales to construction readiness in all major markets, with the exception of Moscow and St. Petersburg (excluding territories administratively belonging to the Leningrad Region, where the figure is 61%). If in June 2024 we had one city in the risk zone (with an indicator of less than 70%), today we see 11 cities there as of April 2025, and this trend is clearly negative,— the head of the analytical center "Movement.<url>" by Yan Gravshin.
He also explained that the ratio of the sale of housing under construction to its availability shows whether developers manage to sell apartments in order to minimize the cost of servicing project financing. For example, the state corporation "Dom.The Russian Federation considers the ratio in the range of 70-80% to be normal for the market.
"A further decline threatens the fact that developers may have difficulties paying off debts on project financing due to the high rate associated with insufficient filling of escrow accounts," the analysts said.
At the end of May, Izvestia reported that in April of this year, sales of residential real estate in Russia collapsed by almost 40%. This was discussed in a study by the consulting company CORE.XP, whose analysts reported that the downward trend will continue next month. In addition, the study noted a 50% decrease in investment in housing construction — from 179 billion to 90 billion rubles. Most of the projects are already being implemented by a limited number of developers, the company's CEO Vladimir Pinaev said at the time.
Although the problems in the industry were felt even earlier. As Izvestia reported in February, a number of companies in the regions went bankrupt or were on the verge of such a procedure. For example, in Rostov-on-Don, IC Donstroy was declared bankrupt due to debts to Sberbank. In Chuvashia, the Regionstroy company was declared bankrupt, and in the Vladimir region, Capital-Stroy.
In the spring, some of the largest developers in the Russian Federation announced a decrease in profits for 2024. So, for the "Plane" it fell three times, and for the PEAK — almost twice. The management of both companies recommended that shareholders not pay dividends for the past year.
On May 21, Russian President Vladimir Putin instructed the government and the Central Bank to take measures to reduce the risks of bankruptcy of developers. This includes developing a temporary program to subsidize the interest rate on loans provided to developers as part of the implementation of the project financing mechanism for housing construction (primarily in small towns) with a planned deadline for commissioning in 2026. The deadline for execution of the order is June 15.
Izvestia sent a request to the Ministry of Construction with a request to comment on the situation in the industry, as well as its willingness to take measures to support it.
Why developers may face bankruptcy
Indeed, large remnants of unsold apartments in ready—made residential complexes are a new phenomenon for many, primarily regional developers, Dmitry Khalin, managing partner and CEO of Intermark Urban Real Estate, told Izvestia.
— Since the existence of preferential mortgages, that is, since 2020, the demand for housing has been so great that it absorbed any supply volumes that developers brought to the market and fell under these programs in terms of housing area and price. Therefore, now large balances are primarily caused by the fact that many regional developers relied solely on the demand provided by preferential mortgages," the expert explained.
According to him, it is no coincidence that Moscow and St. Petersburg turned out to be in a better position, since they have turned into all-Russian markets where buyers with real money from all over the country go, which allows for more dynamic sales of built housing.
— In other cities, as a rule, the demand is local and it is very difficult to find alternative buyers without preferential mortgages. As a result, when the share of unsold apartments becomes very large, the developer sometimes has serious difficulties even in order to pay for project financing for already constructed facilities, and after completion of construction there may be a significant debt to banks," the industry representative explained.
If we talk about measures that could change the situation, then, in his opinion, one of them could be the extension of the preferential family mortgage program to the secondary housing market. Unsold square meters could fall under it, and the situation would begin to improve, Dmitry Khalin believes.
— Of course, there is a problem of unsold goods. The pace of sales has collapsed since last summer, and May showed even worse dynamics. Developers, along with banks, are forced to reduce the pace of construction so that they correlate with the pace of sales, otherwise the loans spent will greatly exceed the amount of funds raised for escrow," Maxim Fedorchenko, president of the Association of Construction Organizations of the Novosibirsk Region (ASONO), coordinator of the National Association of Builders in the Siberian Federal District, told Izvestia.
According to him, at the same time, the desire of some regions to maintain the pace of housing construction further increases the risks for businesses, because in the absence of demand, these square meters become an additional burden. Developers are forced to incur additional loan servicing costs, and banks have little liquid collateral for these loans — all the same unsold apartments.
"Thus, reducing the withdrawal of new projects today is a logical restructuring of the market to meet the realities of demand," the industry representative believes.
He also noted that banks are now trying to review the lending parameters for a huge number of projects, as the financial model embedded in it is not being implemented in terms of sales. Therefore, they require additional collateral and their own investments of available funds, which developers usually do not have, Maxim Fedorchenko explained.
— So far, these difficult negotiations have not spilled over to the surface, but there are risks of funding stoppage. This requires attention from the authorities, but it is impossible to solve the problem without establishing at least targeted financial benefits for projects that have already begun. Either in terms of subsidizing rates and reducing the regulator's requirements for project financing, or to pointwise stimulate demand," the industry representative emphasized.
Regional real estate markets always have more risks and lower margins than in both capitals. The most solvent part of the population is again being taken away from the regionals by Moscow and St. Petersburg projects, Olga Khasanova, General director of URBAN real estate projects, commented on the situation.
— In addition, it should be noted that the residential complexes that are currently being prepared for commissioning were designed at least four to five years ago in a completely different socio-economic reality. During this period, the price per square meter in new buildings in Krasnoyarsk increased 2.5 times, Nizhny Novgorod and Chelyabinsk tripled. But the purchasing power of the population did not keep up with this jump," the expert explained.
At the same time, she believes that the indicated scale of unsold housing still looks quite acceptable. The regional construction industry is holding its own, but the situation may worsen later, Olga Khasanova believes.
She also noted that for many developers who have one or two projects in their portfolio, it is already more profitable to sell the business than to expect any profit in the future.
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