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The excitement over residential real estate in the Russian-occupied Crimea is gradually diminishing, with prices dropping by 15% and demand sluggish over the first quarter of 2015, according to data prepared by Russian newspaper Kommersant.
According to the data of state statistics for the Republic of Crimea, prices for residential property in the Crimea in 2014 grew by 46%, but by the beginning of this year had sharply rolled back: In the first quarter the average price of housing decreased by 14%.
Similar data were presented by analysts from the REM Navigator trading system. According to their estimates, in February the average price of 1 sq. m of apartment space on the secondary market and individual homes was $1,300. The total supply has not changed in the year: with slightly more than 5,000 facilities being sold.
The sharp rise in property prices in the Crimea began in the spring of 2014, after Crimea's sham referendum on joining Russia. Interest from Russian buyers in real estate on the peninsula surged, and sellers began to increase prices, the peak of which was recorded in August, when housing prices on the secondary market rose sharply, by 40%. New buildings were less susceptible to the hype: the cost of housing on the primary market in Simferopol and Sevastopol grew by about 10%.
But the effect of demand growth turned out to be transitory and short-lived, the founder of REM Navigator Oleg Sikorski noted. The activity of Russian buyers has not led to tangible results for two reasons: Property prices were much higher than expectations, while the registration of transactions was not possible due to blocking of the Ukrainian registry of rights existing on the peninsula.
According to Sikorski, currently sales are adversely affected by a general economic slowdown, which discourages clients from purchasing more real estate in Crimea. Domestic demand in the peninsula also fell due to a sharp rise in prices for many product categories.
Analysts are skeptical about the prospects for demand growth with regard to real estate in Russian-annexed Crimea. According to experts from online information source World of Flats, customers are more interested in purchasing real estate in resort areas, and will more likely pay more attention to the Krasnodar region of Russia.