In Russia, the real estate market has been experiencing overheating.

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OREANDA-NEWS  Prices for new housing in Russia deviate from the long-term trend by 15 percent. The overheating in the primary housing market was announced by the Central Bank of Russia, TASS reports.

According to the financial stability review prepared by the regulator, in the first quarter of 2024, demand for new buildings stabilized against the background of a high key interest rate. However, the gap between prices in the primary and secondary real estate markets has reached 55 percent (plus 11 percentage points compared to the last quarter of 2023), according to Rosstat.

“The persistence of the price gap is due both to the transfer of bank commissions by developers to prices for housing under construction, and to a decrease in the availability of secondary housing against the background of rising market rates,” the Central Bank noted.

Now customers are switching from buying second homes to buying apartments in new buildings for which a preferential mortgage is available. As a result, the overheating indicator in the primary housing market reached 15 percent versus one percent for secondary housing. According to analysts, the termination of the massive preferential program, which allows a wide range of buyers (including investors) to buy real estate, can correct the situation.

General Director of the Development Institute “Dom.Russian Federation” Vitaly Mutko said that the government is discussing a ban on the sale of small-sized apartments (less than 35 square meters) on a family mortgage. Currently, the distribution of small-size and family apartments in the total volume of housing under construction does not correspond to the real needs in demography. Apartments with an area of less than 28 square meters account for 11 percent, while apartments in 28-44 “squares” account for 39 percent.

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