Property prices gain traction as signs of buyers return
Published: 14 October, 2009, 23:19
Edited: 01 January, 2010, 00:27
TAGS: Investment, Markets, Economy, Finance
Time to buy property? Russians are returning to the property market as buyers with the market seemingly reaching the bottom, and prices are going up.
Real estate markets around the world are looking more buoyant after being hammered as the global credit crunch morphed into an economic downturn in the second half of 2008 and for the first nine months of this year.
Estate agents say property prices in Russia bottomed out in September, triggering almost a pre-crisis number of deals. With incomes stabilizing, more people are taking the plunge according to Ekaterina Thain, Analyst at Knight Frank.
“People are quite ready to buy as soon as they feel comfortable that it’s the bottom of the market which is slightly going up. So it’s a real rush to buy property.”
The financial crisis played into the hands of Ivor Crotty and his family. They’ve been considering moving to a bigger flat in Moscow but couldn’t afford it when the prices were peaking. He is in no doubt.
“We owned a flat in Moscow, but our family is getting bigger and we decided it was time to get an extra bit of space for ourselves. Our opinion is, and pretty much the opinion of the real estate agents that we've spoken to, is that the market is bottoming out to some extent and we figure right now is a good time to sell what we've got and upgrade it and buy back into the market.”
But experts warn that the market spike could be short-lived. It's largely driven by a shortage of supply, with construction volumes low due to a lack of financing for new projects. Konstantin Kovalyov, Managing Partner at Blackwood believes buyers should beware if they are looking for quick capital gains.
“In the long run it’s just a sign of a little bit of a rise on the way back down to the bottom. Some people think that in the business class and the elite segment of the residential property, situation is improving. But it’s not true. Most of the recent purchases were made on the income made during the period of growing economy.”
Analysts say that shortage of property will continue for at least two years.
14.10.2009, 21:58
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If they are referring to property in Moscow, they're insane! They didn't really drop. The average Russian income can't afford a one room flat. Most people rent at prices just under what is need for a home loan. Cost of living is preventing population growth because no one wants to build a family in a one room flat. Some of these flats have a family with 2 to 3 generations all living there. Fight the coffers and continue building social issues!!!
I find it very hard to judge where anything to do with property prices is going. People seem to have all sorts of reasons for saying it has to go up - which is great for building bubbles of confidence... all I know is that credit is now hard to find in Europe and the criteria has become more difficult. Even this is understandable and perhaps necessary (unless you are a banker). It is true everyone needs to live somewhere but when salaries and jobs are not sufficient and being squeezed - where is the point in raising prices when stuff isn't selling? You could ask a million pounds or roubles or euros if you wish but if noone has more than 500 nothing is going to happen re price restoration - irrespective of the need for shelter.Unlike many Cypriots who refuse to acknowledge this simple truth re prices I have tried to sell two old stone properties (with proper Title Deeds) for some time now. I have dropped the price to HALF the value given by a surveyor just to sell. ll the agents say it is too low.. still hasn't sold as young people do not have the 30% deposit now needed to get the balance from a bank. The rises in prices are going to be a long time coming when things are at such an impass methinks.