SberIndex and DomClick by Sber: preferential home loan programs help borrowers

Oct 21, 2020

The third quarter of 2020 in the real estate market was marked by a sharp revival of demand and activity, according to a joint study by SberIndex and DomClick by Sber. Between July and September asking prices increased by 4.1% y-o-y.

The primary market was the driver throughout the three months, with prices soaring 8.6% y-o-y. By the end of the quarter, demand intensified in the secondary market as well. The cost per square meter here added 3.7% y-o-y, while the share of transactions increased by 5 pp a month. These figures are based on the median price per square meter from DomClick by Sber.

In September, the median offer price in the market for new homes remained at RUB80,000/m2. Taking into account the typical seasonality, this corresponds to the figures observed in the market before the pandemic. In the secondary market, the metric grew by 1.6% m-o-m up to RUB63,500.

As for the number of mortgage loans issued in September, they saw an all-time high. According to SberIndex and DomClick by Sber, the number of loans amounted to 194,000, which is 81% higher y-o-y. The growth rates of loans were almost twice as high as in July and August (+45% y-o-y) when mortgage terms were already very favorable. Analysts believe this is due to the limited timeframe of the preferential program. Now that it is known that the 6.5% rate will remain effective until July 1, 2021, new mortgages are likely to return closer to the summer dynamics.

Prices grew faster in the south and east of Russia, which analysts believe is due to the low base effect and the running Far Eastern Mortgage program. The impact of the pandemic is also noticeable. The Top 10 regions are those that welcomed domestic tourists (Kaliningrad Region, Altai Republic). Housing in the vicinity of Moscow and St. Petersburg is becoming more expensive since over the past year many people have changed their way of life and work. In Moscow Region, the asking price added 18.6% y-o-y over the quarter against an increase of 9.3% y-o-y in Moscow. In Leningrad Region and St. Petersburg the metric jumped 13.0% y-o-y and 7.9% y-o-y, respectively. A decrease in prices as compared to 2019 was recorded in only five regions of Russia.

Svetlogorsk in Kaliningrad Region is the leader among cities in terms of ask price dynamics. The cost per square meter here soared by 36.9% over the year staying around RUB100,000 in both primary and secondary markets. The outsiders are three locations in Moscow Region: Volokolamsk (‒12.1% y-o-y), Shatura (‒9.2% y-o-y), and Lytkarino (‒11.9% y-o-y). However, the region is among the leaders in terms of price growth rates, with as many as five cities having rates exceeding 20%: Khimki (+24.7% y-o-y), Krasnogorsk (+24.7% y-o-y), Istra (+23.3% y-o-y), Zvenigorod (21.5% y-o-y), and Dmitrov (+21.3% y-o-y).

Analysts spotted the decline in prices only in three regional centers: Arkhangelsk (‒2.1% y-o-y), Veliky Novgorod (‒1.9% y-o-y), and Yoshkar-Ola (‒4.1% y-o-y). In Krasnogorsk, Kyzyl, Blagoveshchensk, and Chita ask price growth nears 25% y-o-y.

Have consumers benefited from the preferential program offering mortgages at 6.5% if the square meter price increased that much in the market for new homes?

Average monthly mortgage payments can be calculated using the statistical data from the Bank of Russia on housing lending. If the payment fell, then the program was useful, that is, the decrease in rates turned out to be more significant than the increase in prices. If the average monthly payment is up, then in the end the borrower pays more.

The calculation result clearly shows that the average mortgage payment has decreased significantly, regardless of the comparison period. Nominal monthly payments have reached the level of 2018. Compared to March 2020, the last month before the pandemic, the decrease was 8.8% for all loans in general and 13.0% for the new homes market. Year-on-year comparison with 2019 returns a similar result: ‒7.0% y-o-y for the market as a whole and ‒13.1% y-o-y for new buildings.

Analysts found only two regions of Russia where the average mortgage payment increased: Vologda Region (+2.5% y-o-y) and Chukotka Autonomous Okrug (+0.4% y-o-y). In all other parts of the country, the monthly payment fell compared to 2019.

Since the start of the program, Sberbank has offered customers a reduced rate – from 6.1% when registering the deal in electronic form – under the State Support 2020 program. Now you can apply for a mortgage with state support at Sberbank at a preferential rate from 0.1% by joining a partnership program with developers.

In general, the authors of the study are confident that the impact of the preferential mortgage program was positive for borrowers. Details are available in our study.

When publishing the materials, a reference to SberIndex (www.sberindex.ru) is mandatory.

SberIndex.ru is an analytical website by Sberbank that illustrates how life in Russia has changed during the COVID-19 pandemic. Today, you can find three key indexes on the website, all of them based on anonymized data. These are an incidence model, the consumer activity index, and consumer activity changes. The all-new Business section features the evolution of gross payroll and change in small business activity. The website also has other studies, including all SberIndex lab ones (former SberData).

DomClick by Sber lets you find, do background checks, and safely sign housing deals, allowing users to buy, sell, or rent out real estate, take out a mortgage, register a transaction electronically, and enjoy secure transactions between a buyer and a seller, all done online. You can choose a home from more than 2 million classifieds currently selling or renting out real estate. You can apply for a mortgage in five minutes and receive a bank decision within 24 hours. The service has a monthly audience of more than 11 million users and is among the most visited real estate websites in Russia. More than 419,000 mortgage loans for over RUB1 trln have been issued through DomClick.ru thus far.