Housing Prices to Remain Stable

Despite a sharp rise in the cost of construction equipment, most specialists are not predicting a leap in newly built housing prices.

In the coming months, the situation is expected to hold steady. Prices could even drop slightly in March and April.

"ThereТs no significant activity expected on the market until March," said Alexei Fedotenkov, marketing director with Inkom real estate agency.

By early spring, builders are expected to finish the construction projects that were due to be completed last year and put them on the market. Then, according to Fedotenkov, the market will start a slow fall. Prices will drop no more than 5 percent, he estimates, after which the market will pick up. Housing prices could rise as much as 15 percent by the end of the year, he added.

In the short term, there are no serious grounds to expect a rise or fall in prices, said Oleg Repchenko, head analyst at Moscow Real Estate Investment Agency. The usual December rush never came this year, he said, nor did January prices take their characteristic fall.

But the situation has been made somewhat unpredictable by the Moscow Construction UnionТs plans to introduce its own policy, which, Repchenko said, makes it very difficult to forecast trends.

Vladimir Resin, first deputy mayor and head of MoscowТs architecture, construction, development and reconstruction complex, agreed that the cost of housing is unlikely to noticeably increase this year, despite a 69 percent growth in the price of construction materials. Resin links the rising equipment costs to inflation.

The city has played a hand in holding housing costs down at their former level despite the rising equipment prices by using its construction-material reserves, said Yevgeny Leonov, chief specialist for marketing with the department of nonbudgetary policy for city construction.

Competition emerging between construction firms also helps keep production costs under control. And more companies are moving to Moscow from such places as St. Petersburg, Yugoslavia, Bulgaria and Ukraine.

On Friday, a tender was held to determine the general contractor for the construction of nine micro-regions in the Kurkino district. The Ukrainian company Konsol-Invest emerged victorious. Vladimir Lobod, who organized the tender committee and is deputy head of the department of nonbudgetary policy for city construction, said Konsol-Invest won the contract because it offered the lowest price per meter.

Konsol-Invest has been building homes and garages in Moscow for four years. In Kurkino, it is to build this year the shells for 32 town-house blocks with a total area of 46,000 square meters, said Dmitry Klyuzko, general director of PFK Dom, sponsor for the micro-region.

The production of the town houses costs $350 per square meter. The average starting sale price determined by an interdepartmental committee is, on average, $650 per square meter. The price will rise to $750 in September 2001, when residents are expected to move in, said a source who declined to be named.

So far, one can only speak of potential interest in Kurkino Ч the project is still relatively unknown in the capital. As of September 2000, when sales began, only 64 apartments were sold. Sales began at $495 per square meter. In December, the price rose to $525. By March, the price gauge will hit $590 and push $650 by June.

Standard housing in regions of mass construction is cheaper. The average price rose between August and the new year by 10 percent to 15 percent, said Oksana Novikova, head of new housing sales with the Miel real estate company.

Prices are rising at a higher rate in Mariinsky Park Ч 25 percent over the past nine months. Following this tendency, if before the new year it was possible to buy an apartment in the 42nd micro-region for $520 to $540 per square meter, then today the housing will be offered at $550 to $575 per square meter. However, in NovikovaТs opinion, $550 is the ceiling for the region.