Russian construction companies are coming to autumn bankruptcy

Sales of apartments in new buildings have catastrophically fallen over the past few months.  Among the leading regions in the list of those where the demand for apartments in April 2022 decreased by 90% or more are the developers of Yugra and the Sverdlovsk region.  Here the number of concluded deals decreased by 92%.  If this trend in the market continues, a significant part of companies may become candidates for insolvency by September .

According to Izvestia, referring to the bnMap.pro monitoring system, the situation with the sale of square meters of housing in new buildings turned out to be the most deplorable in Kurgan, Kazan and Volgograd.  The demand rate there fell from 97% to 99%.

The situation is equally negative in Novosibirsk and Yekaterinburg, where sales collapsed by 90% and 84% respectively.  Tyumen (80%), Sevastopol (80%) and Nizhny Novgorod (76%) are also among the ‘leaders’ in the list of cities where the demand has markedly fallen.

Experts attribute the economic crisis in the country and the problems of bank lending to the reasons for such a sharp collapse in real estate sales.

Citizens, finding themselves in a situation of uncertainty with the prospects for their employment and financial stability, experience fear of making purchases for large sums of money.  The sharp increase in mortgage rates that accompanied the first weeks of the start of Russia's military special operation and the sanctions of Western countries that followed it does not contribute to this either.

Experts give disappointing forecasts for the development of the situation in the construction market.  In the coming months, low demand will determine the seasonality factor.  If the economic situation does not get worse by autumn, sales may move to the growth stage, but they will hardly return to the indicators of previous years.

According to analysts, many developers voluntarily begin to subsidize mortgage programs in the current situation, trying to support the demand.

However, the cost of housing may still fall down, especially in the regional market.

It is curious that the least vulnerable in the current situation turned out to be the sales of new apartments in Moscow and St. Petersburg.  Here the demand decreased only by 46% and 59% respectively.  Analysts' data indicate that mortgage programs account for the bulk of the transactions that have been concluded in recent months.  In some regions, their share turned out to be total, having excluded any other sales.