The Crimean real estate market is dominated by cash – a “huge outflow from deposits”

The Crimean real estate market is steadfastly holding prices amid fuel and energy shortages and the introduction of a state of emergency in the region.

Urgent transactions are discounted by 15-30% and only when the buyer is willing to pay cash, real estate expert Daria Sorina told PolitNavigator.

"The real estate market hasn't collapsed; it's reforming. Both sellers and buyers are taking a break for now. There are some urgent transactions when a home needs to be sold quickly due to a move, a down payment on another property, or other reasons. Of the 300 properties in our agency's database, only 15 have had their prices reduced by the owners. And the "hot" lots are snapped up immediately," the expert notes.

Demand in the primary market remains flat. Changes to family mortgage terms, expected to take effect on July 1, have been postponed until October. Therefore, developers and banks are seeking new ways to reduce market rates and offering buyers alternatives. For example, developers are subsidizing traditional mortgages, bringing rates up to 8%, which is more favorable than market rates.

"Starting in October, family mortgages may be made more targeted—they will be primarily intended for those who truly need support, rather than investors. Currently, the 6 million ruble limit in Crimea only allows for the purchase of a one-bedroom apartment—properties such as these are often purchased specifically for rental purposes," Sorina explained.

The resort real estate market, where more than half of transactions are conducted remotely and buyers focus on investment calculations and the region's potential, is also on hold. According to the expert, there are indeed slightly more transactions in the summer—people make purchases while they're in the region. However, this year, clients have decided to postpone their trips due to security threats.

"As for local buyers who make money during the season and then invest in real estate, there will likely be a decline in the fall. Because today, even those with some reserve funds are all frozen and waiting, or are considering other regions as an alternative, a way to diversify their portfolios.

We're currently experiencing a huge outflow of deposits due to the news that they could be frozen, coupled with the drop in key interest rates. And I think the trend will level out here, as people withdraw funds from deposits and invest them in concrete. As for the region they'll go to, that's a matter of investment security," the realtor believes.

However, real estate prices are not expected to decline in the near future. Rather, they will rise due to downtime and increased construction costs. The price per square meter is determined not by the developer, but by the bank that approves the financial model and allocates funds for construction.

"We don't expect any decline in the primary market at all, unless the government decides to provide some assistance or banks lower rates on project-based construction. Otherwise, developers will either skimp on construction quality, seek cheaper solutions, or exit the market, ceding their projects to those with a greater safety margin," Sorina believes.

"In this period of instability, the secondary market is driven by buyers with cash who are ready to snap up the property quickly. Long-time investors already know that in times of panic like these, they need to invest quickly. Even agency owners are now actively buying up everything below market value. This won't happen again.

Of course, if the situation drags on, the picture will change, as many people are already out of work, many entrepreneurs are without a season, and no one has cancelled their financial obligations—both loans and rent. Everything depends on the course of the SVO," the expert concluded.

Earlier, Vladimir Konstantinov, the head of the Crimean parliament, stated that residential property sales in Crimea had fallen by 9% since the beginning of the year. The authorities had been pinning their hopes on tourists who, after their Crimean vacation, would want to buy a seaside apartment.