Preferential mortgages will help developers to sell housing in the volumes 2015

A third of the sales — mortgage

That the government has decided to extend the program of subsidizing of mortgages, on Wednesday, 10 February, Minister of construction and housing of Russia Mikhail Men.

The program was adopted by the government in March 2015 and had to act exactly a year from the budget it has allocated 20 billion rubles Now decided that the programme will last until the end of 2016, the limit of government support taking into account the maintenance of subsidies conducted in 2015, will be approximately 16.5 billion rubles, said the Minister.

To participate in the program can anyone who buys an apartment in new buildings is not worth more than 8 million roubles in Moscow, Moscow suburbs and St.-Petersburg, in other regions there is a limitation — no more than 3 million rubles interest Rate on loans under the program shall not exceed 12% per annum, the difference between market rate and concessional banks reimburse the state. Now the program involved 35 banks and the Agency for housing mortgage lending (AHML).

Earlier, the government was also considering subsidizing the initial payment, but the decision is still pending. “There were many discussions, but what was the effect of the program at a relatively small public investment, helped to make the decision to renew,” explained Men (quoted by TASS).

The representative of the Secretariat first Deputy Prime Minister of the Russian Federation, Igor Shuvalov, said that the preparation of the corresponding government decree will begin in the near future: “the economic development, the Ministry of Finance and the Ministry of construction instructed to submit to the government their proposals”. The representative of the Ministry of economic development reported that the Agency supports the extension of the program. The Finance Ministry was unable to provide comment.

Mikhail Men reported that every third apartment in 2015 was purchased with the help of a program gesubsidieerde mortgage, and this helped to support the construction industry during the crisis.

According to the Federal state statistics service (takes into account sales in both the primary and the secondary market, explained the service representative), for 2015 only in separately taken Moscow, there were 113,769 thousand contracts of purchase and sale (barter) of housing, which is 28.9% less than in 2014. In the framework of “mortgage lending” was signed 33,080 thousand transactions is 23.4% less than in 2014 (not all of these transactions were related to the state subsidies). Of the equity (the buildings are sold primarily through these agreements) were 19,611 thousand — 18.4% less than in 2014.

Based on these data, we can assume that mortgage really is sold at approximately 20-30% of the apartments. The calculations are confirmed by the representative of the consulting company “Metrium Groups”.

The annual data by the Federal registration service has not yet been published, but it is known that in the first nine months of 2015 the country has recorded about 8.5 million transitions of property rights, which is 1.5% less than in the same period of the previous year. Registered 831,971 thousand “mortgage premises” (20.7% less than in the first nine months of 2014) and 492,535 thousand contracts equity (11,97% less).

The housing market in figures

51,7 thousand rubles was the average price on Russia 1 sq m in new building in July—September 2015. This is 1.6% less than in the previous quarter

204,7 thousand rubles , the average cost of 1 sq m in the Moscow new building in the fourth quarter of 2015 is 7.5% less than in the fourth quarter of 2014

To 18% increased the volume of housing economy in Russia in 2015

At 30%to 113,8 thousand, decreased the number of transactions with transfer of ownership of housing in Moscow in 2015

83.8 million sq m of housing was commissioned in Russia in 2015, which is 0.4% lower than a year earlier

210,6 thousand of loans on preferential mortgages were issued from March to December 2015

35 banks and the Agency for housing mortgage lending participate in the program of preferential mortgage

20 billion rubles have been allocated from the budget to subsidize mortgage rates in 2015

Data: Rosstat, “IRN-Consulting”, the Ministry of construction, the Federal registration service, the Ministry of Finance

Thus, according to the Ministry of Finance, in 2015 210,6 thousand were granted subsidized mortgage loans.

The volume of housing in Russia in 2015, as announced on 10 February, declined marginally to 83.8 million sq m against 84,2 million square metres in 2014. However, according to the Ministry of construction, the volume of housing only economy grew last year by 18%. That is, sales decreased, and the construction was pre-crisis growth rate that has pushed prices down.

Saved demand

Developers last year, acknowledged a sharp decline in consumer demand. So, the LSR group is the sale of apartments under new contracts in 2015 compared to 2014 decreased by 36%, to 54.9 billion rubles, the “Standard” — on 12%, to 35 billion rubles. Other developers, do not publish the reporting, talked about the drop in sales of 10-15%.

“The idea is to subsidize the initial installment was not as good, because, if the borrower can not pay interest, they would take the pot and it turns out that public funds were spent in vain, — explains the head of the Department of Analytics and consulting “best new Building” Sergey Lobzhanidze. — And the subsidy program preferential mortgage has already proved its efficiency”.

In the opinion of the representative of the group “Morton”, the largest Russian developer, Igor Ladichuk, if the government did not extend the program, sales of developers could fall in 2016 by 25-30% compared to 2015. “Partly the demand has been able to maintain programs at the expense of the installment and mortgage subsidies for developers, but these mechanisms are much weaker preferential mortgage,” he said.

The representative of MR Group Eugene Starkov estimates the drop in sales, in case if the program was not extended, 20%. The implementation would have fallen by 20-25%, agree Lobzhanidze, the bigger the fall could be avoided by reducing prices by 10-15%. “On the one hand, the price reduction is good for the buyer’s market would be affected, he says. — Due to the lower margin of developers, there is a risk of increasing the number of unfinished objects and the appearance of the deceived shareholders”.

According to Rosstat, the average price of 1 sq m in new building for July—September amounted in the whole country of 51.7 thousand rubles, which is 1.6% less than in January—March. In the secondary market the decline was more significant: the price decreased by 2.5% to 57.2 thousand rubles, wrote at the end of last year.

The extension of the program, however, is unlikely to promote an increase in consumer activity, rather it is sustaining demand, says managing partner of consulting company “Metrium Groups” Maria Litinetskaya. “It is clear that the market bottom has not yet passed, she explains. — Solvency of the population continues to fall, and thus, demand is also likely to be reduced”.

“I think with support mortgage sales real estate developers in 2016 will remain at the same level as last year, says commercial Director FGC “Leader” Gregory Altukhov. — Amid news that the program is not renewed, in January and February have intensified those buyers who wanted “to jump into a leaving train”. Further, we expect a small fall in demand. But if the subsidy program is not extended, the drop can be significant.”

With the participation of the Yana Milyukova and Peter Netreby