The most expected consequences of the crisis include reducing prices for all market segments. Mainly this applies to those sectors in which the increase in prices took place ahead of the pace.
In relation to Russia, the first thing that comes to mind in this sense is housing prices. The collapse of the bubble in this market began to predict a very long time ago. It seemed that the collapse was inevitable first in 2005., Then in 2007. Growth in housing prices in the spring of 2008 provoked a new surge in talking about the collapse of the market. Then this did not happen. But with the advent of the current global crisis, there was no longer an analyst who would not talk about the inevitability of the collapse of prices. A few months ago, such forecasts differed only by the degree of courage and severity of the consequences.
The expected consequences of the crisis and reality
What is happening with the housing market now and how much such forecasts have been justified? Of course, it cannot be said that the forecasts of falling prices in the housing market were not justified at all. In some regions and for certain types of real estate, reduction of prices was significant. However, nowhere was it catastrophic, and there can be no talk of the collapse of the whole market.
We believe that the main reason here is that in the preparation of forecasts in this market, the initial point of assessment was incorrect. Cooling the bubble and a sharp fall – the destiny of markets, which are characterized by overproduction. As for the Russian residential real estate market, it is extremely premature to talk about overproduction on it. Even in relatively prosperous regions, such as Moscow and St. Petersburg, the ratio of existing housing and housing needs indicates that before saturation in this market is still very far away.
However, these calculations do not remove the main question – is it worth expecting a fall in housing prices. If the crisis is deepened, then, most likely, yes. The general decrease in solvency cannot but lead to a further decrease in the housing market. However, we can confidently assume that such a decrease will stop as soon as the first signs of the completion of the crisis appear. And as we restore the general economic situation, we most likely return to the state of things that we are already accustomed. Especially if oil prices take off again.