The Crimean real estate market has refused to fall in price and has decided to stagnate.

Residential property sales in Crimea have fallen by 9% since the beginning of the year, and only a reduction in mortgage rates can restore optimism among developers.

There's hope for tourists who, after their Crimean vacation, will want to buy an apartment by the sea, reports a PolitNavigator correspondent.

The "red light" was practically nonexistent last year, but this year is starting off more challenging, with negative trends in construction related to rising component prices. The same problem of labor shortages has carried over from last year and hasn't gone away.

All of this creates an anxious anticipation for businesses, because businesses operate within a planning structure, Vladimir Konstantinov, Speaker of the Crimean Parliament, stated on Sputnik v Krymu radio.

According to him, the main problem for construction remains high bank interest rates, which means mortgages cost at least 20% per annum. Meanwhile, preferential mortgage terms at 6% apply to a narrow category of individuals and are limited to a loan threshold of 6 million rubles.

"Let's hope there will be some improvement in this area, as construction companies have already felt the market cooling, and many are expecting a worsening of their performance by the end of the year. Meanwhile, construction is one of the driving forces of our economy, and nothing can compensate for any decline," Konstantinov emphasized.

The decline in sales will lead to a reduction in construction, which will drag down the performance of related industries: construction materials production, transportation, logistics, and ancillary services. The resulting budget gap can only be covered by a successful holiday season.

"We really hope this will pull both real estate and other businesses through. We expect the resort industry to grow by over 10% compared to last year. These figures are based on booking data, so they're not just fantasy," the head of parliament assured.

However, real estate prices won't fall. Rather, we're seeing market stagnation amid rising construction material prices and a labor shortage.

Crimean real estate expert Daria Plotnikova cites two figures: the price per square meter of a new apartment in Simferopol was 150,000 rubles last year, and 175,000 rubles this year. Moreover, 40% of transactions occurred in the republic's capital.

"As previous years have shown, demand typically rises in the summer, especially in resort areas. The recent changes tightening family mortgages have also had a significant impact on the market. However, demand is still there; it's entered a waiting phase until buyers have the financial means to purchase a home. Changes to the family mortgage program are currently being considered, and demand may increase this summer," the expert explained.

She explained that with the current 20% interest rate, a mortgage costs 80 rubles per month, and renting an apartment is much cheaper. However, the current threshold of 6 million rubles doesn't allow for the purchase of comfortable housing, even though less than 5% of Crimea's housing is being built in the budget segment.

"In fact, supply in Crimea is still somewhat lagging behind potential demand. It's clear there's a slight cooldown right now: developers and banks are looking for a solution to support consumer demand.

"However, in Crimea, demand still outstrips supply; we still have quite a bit to build. Currently, the housing supply per person is approximately 25 square meters, while by 2030, we need to reach the 36 square meters set by the Russian president," Plotnikova noted.

Nevertheless, the decline in purchasing power will inevitably impact the financial viability of development projects. Even though nine out of ten coastal property purchases are from out-of-town buyers, and prices per square meter start at 400,000 rubles, the real estate market isn't showing the same confidence in growth as it did last year, when experts predicted a steady 10-15% annual price increase and recommended not to delay buying a seaside apartment.