The dynamics of real estate prices in Moscow are interesting to people who already have square meters in the capital in order to understand what prospects they have in changing the value. But, first of all, this issue worries investors interested in the effective investment of available funds.
Key cost drivers
Property price depends on many factors. For example, a good economic situation in the country and its stable growth entails a rise in price of square meters. During periods of crisis, their value, on the contrary, falls, responding to falling demand. This is due to the reduced investment attractiveness of the region and the decline in the purchasing power of the population. In addition, the cost is affected by:
- the cost of the facility;
- development of a region and district;
- infrastructure;
- the quality of the materials used and the construction work performed;
- supply and demand ratio;
- exchange rates;
- the presence / absence of government programs to stimulate the acquisition of housing.
State regulation has an impact on the cost of the object. Since cheap loans and various subsidies can seriously save on the construction of the object, which means that there is an opportunity to sell cheaper.
The dynamics of growth in property prices in Moscow largely depends on its type. For example, new buildings are usually more expensive than secondary housing. This is due to better planning and application of new technologies. In addition, inflation and various political and economic decisions affect the construction process itself, leading to higher prices for materials used, technologies used and labor.
One and two bedroom apartments are in greater demand than three or four bedroom apartments.
Commercial property
The dynamics of prices for commercial real estate in Moscow very much depends on the economic situation in the region and the country. In times of crisis, first of all, the demand for offices and premises decreases. This is especially felt in the segment of expensive facilities located in the central or elite areas of the capital. Following a decrease in the number of businessmen willing to pay big money for rent, the cost of renting and selling such objects invariably falls.
For example, in the crisis that began in 2014, a large number of offers for rent and sale at reduced prices appeared.
The main trends in price changes
The cost of square meters in a metropolis is always higher than in less developed cities. Therefore, the dynamics of prices in the real estate market of Moscow may differ from other regions. Moreover, the general direction of trends is approximately the same.
If you look at the change in average cost since the mid-nineties, the general trend indicates a stable rise in price of real estate. At the same time, the trend changed diametrically during the 1998 crisis.
Prices fell to a minimum and stayed at that level for two years, after which a steady growth began. They peaked in 2008, when the average cost per square meter of a one-room apartment was $ 7,000. Then, the dynamics of real estate prices in Moscow began to be adjusted downward. Thus, the market reacted to the global crisis.
A year later, prices went up, as the crisis slightly affected the state of the Russian economy.Despite the fact that over the next few years there was no stable tendency to increase or fall, and prices remained at approximately the same level, they did not approach the 2008 maximum.
The crisis of 2014
The dynamics of prices in the real estate market of Moscow expectedly changed downward. But at the same time, the results of the analysis differ greatly depending on which currency the comparison is made in. Since the main problem of the crisis was the serious depreciation of the national currency and the appreciation of the euro and the dollar, the cost per square meter of housing in foreign currency terms lost significantly more than in rubles.
Another feature of this crisis can be called the fact that by the end of 2014 there was a significant increase in demand for real estate in Moscow. People whose incomes were in foreign currency, considered it right to invest money in real estate. But the period for successful transactions was not long, the market reacted as expected, causing real estate to rise in price in ruble terms.
Market Situation in 2015–2016
The dynamics of real estate prices in Moscow did not react strongly to the concomitant drop in demand. Prices fell sharply in dollar terms, but rose in national currency. Although at the same time they did not show such a fall as it was during the default period of the late nineties. Developers were not going to sell apartments in new buildings at cheaper cost. Those who had apartments in the secondary housing stock preferred to wait, receiving money from renting them out. The market has taken a wait and see attitude.
Hope for growth
The dynamics of real estate prices in Moscow is currently at a stable level. Without major changes in the exchange rate and the development of the economy, they will again go up. True, according to analysts, in the coming years we should not expect sharp fluctuations, the market situation will be quite calm.
Investing in real estate is considered one of the safest ways to invest money, since in the long run it usually shows a stable rise in price. But it is difficult to expect that the price will reach the level that was observed in 2008. Then the prices were too high, responding to very high demand.