Property prices gain traction as signs of buyers return
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.