 
The second quarter of 2006 saw two upcoming trends on the property market: slowdown in price rises and supply reduction. Commenting on the situation Usadba expert envisages that the shortage of land plots available for development in the city will drive the elite housing market outside the city centre.
The second quarter of 2006 saw two upcoming trends on the property market: slowdown in price rises and supply reduction. Commenting on the situation Usadba expert envisages that the shortage of land plots available for development in the city will drive the elite housing market outside the city centre. A distinctive trait of the first summer months was a shortfall in supply on the elite housing market of Moscow. Apart from the fact that lots of properties have been sold to the growing number of investors there is also reluctance on behalf of the owners to put their properties up for sale. In Ivan Shulkov’s (Usadba expert, Head of Investment Consulting) opinion this trait was brought about by the lack of clarity in the new version of Federal Law 214 on shared construction as well as the Moscow government’s proposal to tighten its control over the process of property development and sales. Besides these reasons of administrative nature there is also an economic explanation for the current state of affairs. A number of developers have decided to await the price rises to take over in September after the quieter summer season in order to get the best return for their projects. All this led to supply on the property market having been cut by 17 % between March and June. Concerning the price index of elite Moscow property, we would say that although on the whole it retained its tendency to go up, in the last few months the rate of price rises have shown some slow down. For example in April a cost of a square meter increased by 9.8 % compared to the previous month, when the same index rose only by 2.3 % in June. For the period from March to June a square meter cost rose from 9 248 to 10 936 USD, signifying price rise index 18.2 % and bringing the average flat price up to 2.5 million USD. It is also worth mentioning the latest tendency for extending development territories outside the city centre. It looks as though the elite property market is making its first hesitant steps out of customary areas. In Ivan Shulkov’s opinion, “the tendency to exploit new territories around the city centre can dramatically change the definition of elite development. Building rules are more relaxed outside the city centre allowing more freedom for architectural concepts and more room to make apartments more comfortable. In addition to the above, non-central districts have other superior features, such as: better ecology, additional green areas, more relaxed lifestyle and others”.
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