The lower mortgage rate affected the Бbusiness-class segment, boosting demand in the second half of 2020 and supporting new supply in 2021. In 2021, the new supply grew by 85.3% year-on-year, with the total supply increasing by 9.4%.
The year 2021 saw the strongest demand ever, exceeding the 2020 boom by 17.2%. It was driven by subsidised mortgages in the second quarter of 2021 (customers trying to take loans before the programme expired) and low-rate mortgages offered by developers to support sales.
The share of mortgage transactions in the segment increased by 3.3 p.p. year-on-year to 51%, primarily on the back of the loans taken in the first half of 2021 in anticipation of the mortgage rate growth.
Supply and demand in Moscow’s market of new business-class housing, thousand sqm
Sources: newly built housing database, Rosreestr, Company’s proprietary databases
Share of mortgage transactions in the business-class segment, %
Sources: newly built housing database, Rosreestr, Company’s proprietary databases
A surge in demand triggered a rapid increase in the price per sqm. In 2021, the price rose by 22%, up 7.1 p.p. compared to the price growth in 2020.
The share of demand for small properties (up to 50 sqm) in the overall supply and demand structure exceeded the share in supply, causing a shortage of small properties in the business-class real estate market. At the same time, the share of demand for properties over 100 sqm was lower than that of supply. This suggests that the increased share of mortgage transactions drove customers from comfort to business-class.
The segment is sensitive to the mortgage rate fluctuations, therefore 2022 is likely to see the trend for subsidised low-rate mortgage programmes and long-term interest-based and interest-free installment plans.
Average selling price per sqm of new business-class housing in Moscow, RUB thousand
Sources: newly built housing database, Rosreestr, Company’s proprietary databases