What kind of competition does the real estate market belong to? Types of markets
A market in economics is a mechanism of interaction between sellers who provide supply and buyers who provide demand. In the course of this, the level of the equilibrium market price is established. For each product, there is a certain cost limit.
Participants market relations they act in their own interests: sellers are interested in selling the goods at a price that will provide them with the maximum profit, while the buyer, on the contrary, wants to get at the minimum price and get more benefit from his purchase. Usually, the deal is executed with an intermediate option, this is the equilibrium price.
Market structure and types
The structure is characterized by the internal structure of the market, the relationship between individual elements, their share in the total volume. The basis that determines the design is the form of ownership that operates in the economy. It can be public, private, collective, or mixed.
The main subject economic activity market economy is the household, business organization and government. Interaction between these elements occurs in all types of markets.
Depending on the items for exchange, the following types of markets are distinguished in the economy:
- market for factors of production;
- market of final goods and services;
- financial market;
- market of intelligent products.
Market of goods and services
The main feature of the consumer market is that the pricing policy is formed after the production of products. Unfortunately, this species is most prone to crises.
Market for factors of production
This type includes three more interconnected markets:
- labor market;
- capital market;
- real estate or land use market.
This relationship is characterized by the dependence of supply and demand. Consider at specific example: the level of prices in the labor market has increased, respectively, the wage rate has also increased. As a result, firms increase capital and replace labor that has risen in price.
A distinctive feature of this type of market is the derivative nature of demand. The main goal here is making a profit, and capital, human resources, land are the conditions necessary for production. The demand, accordingly, is generated by the desire of a business or enterprise to get as much profit as possible.
Financial market
This type is very diverse and many-sided. The subject of sale and purchase invariably is money, which is provided for use in various forms.
The types of financial markets are classified in several ways:
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In such a market, an exchange is made securities, precious metals and foreign exchange.
Types of financial markets:
- Currency market.
- Gold market.
- Capital market.
- Money market.
- Stocks and bods market.
- Insurance market.
Market of intelligent products
This includes a variety of scientific inventions, innovations, or information services. Smart markets also include literary works and various art forms.
The types of markets are defined according to several criteria.
Geographical position:
- local markets;
- national;
- world market.
Competition Restriction Degree:
- monopolistic;
- olipolytic;
- monopsony;
- free;
- mixed.
By the nature of sales, there are such types of markets in the economy:
- wholesale;
- retail.
Types and types of markets by saturation level:
- equilibrium;
- redundant;
- scarce.
In accordance with current legislation types of world markets are:
- legal;
- illegal (black).
Industry criterion:
- computer;
- clothing;
- book;
- grocery, etc.
The main types of markets are divided into submarkets and market segments.
Market segments are parts of the market or consumer groups that are united by the same requirements for a given product or service.
According to the demographic principle, the market is segmented by age, gender, marital status of consumers.
Competition
The basis of competition is free consumer choice, which manifests itself in getting the maximum monetary profit. This is the main task of the proposal.
There are four types of markets, depending on the degree of competition and the nature of pricing:
- One in which there is free (pure, perfect) competition.
- Monopoly.
- Oligopolistic.
- Pure monopoly.
It is possible to determine the type of market, taking into account the competition, based on the number of buyers and sellers.
Free competition market
In other words, there is pure or perfect competition in such a market. This is the most common type. His main feature consists in the fact that there is a large number of sellers (at least forty) and an even larger number of buyers. Prices are set by the market itself, and no seller can overstate them, otherwise he will deprive himself of customers.
The types of markets with free competition are characterized by the homogeneity of the offered goods: products, clothing, metals, etc. These must be the same or interchangeable products.
The pricing policy is formed on the basis of the analysis of supply and demand, no company can significantly influence the pricing.
Today, the types and types of markets with pure or free competition are stock exchanges, fairs and city markets or bazaars.
Market of monopolistic competition
The next most popular type of market. There are ten to forty sellers here. The main difference is the pricing policy: it fluctuates in a fairly wide range. The offered goods differ from each other and are not always interchangeable.
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Pricing takes place in a competitive environment of organizations that produce similar but interchangeable goods. Each enterprise has specific features of production, this allows them to independently set prices for their own products. In this regard, in some way they are monopolists.
This includes the following types of products: soft drinks (juices, mineral water), tobacco products, alcoholic beverages, confectionery, medicines, clothing and footwear with branded logos, household chemicals, sports goods, plumbing, tools, equipment, etc.
The modern economic system of the Russian Federation has all the opportunities for the development of a market with this type of competition and the creation of a sphere of competitive prices.
The market for oligopolistic competition
This is a special type, which consists of a small number of large firms that provide the entire market with their products. Usually the number of enterprises ranges from seven to ten. They can offer both homogeneous and interchangeable goods (ferrous and non-ferrous metals, aluminum, plastics, etc.), and different from each other (electrical engineering, cars, computers, mobile phones).
This type of market is practically closed to newbies, because it contains mainly global brands that have been developing for decades. Each seller monitors the pricing of competitors, but often this does not affect his pricing policy.
Within the territory of modern Russia most of the industrial products, as well as some types of services, are produced in oligopolistic industries. These are mainly oil producing and refining companies: Lukoil, Rosneft, Onako, Yukos, Tatneft and others. This includes the coal industry, ferrous and non-ferrous metallurgy (aluminum, tin, lead, zinc, etc.), the production of cars, electrical engineering, tractors, electric vehicles, as well as the chemical industry.
Pure monopoly market
it special type market, which consists of only one seller. This is often a government agency.
A private monopoly firm independently sets a high price for its products. She does not target any other firms or authorities local government nor the administration. The “monopoly” type of market is also independent of any changes in the country's economy.
Organizations do not always ask for the highest possible price, they are afraid that the state may regulate pricing policy and attract new enterprises, creating competition in the market, or that some of the customers and buyers may lose.
With complete freedom in setting prices, firms are guided by the level of demand, this helps them to optimally evaluate their products.
Economic market types are not found in their pure form. Any company has the ability to perform with several products in different markets.
Situation in Russia
The Russian Federation is characterized by high market monopolization. Its level in some sectors of the economy reaches 80-100%. Along with natural and industrial monopoly (vehicles, harvesters, etc.), there is also state domination. Hence it follows that the type of market in Russia is monopolistic, but with elements of free competition (for certain types of goods, especially food).
However, all economic processes are taking place in accordance with the current legislation.
The underdevelopment of the market institutions of the Russian Federation is manifested in:
- With regard to property: the development of the shadow economy, a low level of legitimacy of property rights, etc.
- In economic entities: a low level of contractual discipline, an unfinished process of adaptation to modern market conditions, lack of ownership of all resources.
- In the mechanism of market self-regulation: large administrative barriers, strong manifestation of monopoly, business oligarchism, low level of consumer protection, weakness of the middle class, violations of the function of money.
Market analysis does not provide ready-made solutions to establish a pricing policy, but it is needed in order to determine the pattern in pricing, which depends on the ratio of supply and demand.
When choosing any pricing strategy, a company or enterprise takes into account the following factors:
- Prices for goods or services are reviewed regularly.
- Most of the products are sold at discounted prices at the end of the season.
- Demand is elastic.
- Buyers are price sensitive and fall for lower prices.
- When compiling prices, competition, demand, product quality, information about customers are taken into account.
- The types of markets in the economy allow you to reasonably build the pricing policy of the enterprise.
- At least once a quarter, it is necessary to conduct a thorough market analysis and monitor price changes from competitors.
- Production costs are calculated regularly.
The market is an extremely complex structure. Its study requires taking into account a huge number of factors and features.
Real estate market
The market economy is based on the right to private property - the right to own, use and dispose of property. This allows citizens or private enterprises, at their discretion, to acquire, use and sell material resources and conclude contracts that are legally binding and binding for partners.
Property ownerhas the right to bequeath, i.e. the right to appoint a successor to this property after his death, which essentially supports the institution of private property. It should be noted that with a market model, there is state property as well as property in mixed forms. Naturally, the legislation should provide for legal restrictions on private property rights related to the interests of society as a whole.
Freedom of entrepreneurship and choice is directly related to private property. Freedom of entrepreneurship allows you to organize the production process from available resources and sell the produced goods (products, services) on the market at your own discretion. The decision to enter a particular market (type of activity) or exit from it is in the hands of an entrepreneur.
Freedom of consumer choice, i.e. the consumer's freedom, within the limits of his income, to purchase goods and services in a set that is most suitable for satisfying his needs, is dominant among other freedoms and determines the limits of freedom of choice of suppliers of material and human resources. The result is that the consumer decides what the economy should produce.
Personal interest shapes the behavior of various subjects of the real estate market when they exercise their free choice. Each of them strives to do what is economically beneficial for him. So, property owners strive to get the maximum price when selling or leasing it, tenants are trying to extract the maximum profit from the use of leased space. Stimulating self-interest is one of characteristic features market economy and to a large extent gives it direction and orderliness in its functioning. The freedom of choice, which is realized for each market participant in the form of the desire to receive personal income for himself, serves as the basis for economic competition, or competition.
Competition in the real estate market involves:
· the presence on the market of a large number of independently acting sellers and buyers of specific goods, products, resources and services;
· freedom for sellers and buyers to enter and leave certain markets at their own discretion.
However, the essence of competition lies in the fact that the real estate market has such a large number of sellers that each of them, providing a small share in the total supply, is practically unable to influence the price of goods. The same ratio is also true for those who act in the real estate market as a bearer of demand. There are many buyers and a single buyer cannot manage the market to his advantage. Competition sets the limits for sellers and buyers of real estate selling their personal interests.
The most common form of competition is price cuts. It lies in the fact that sellers of real estate, seeking to increase (accelerate) the number of sales, offer it at lower prices than competitors. To do this, each seller needs to do everything in such a way as to sell at the same prices as the competitor, or cheaper. An entrepreneur who does not have sufficient skill in this regard has to leave the real estate market sooner or later. Conversely, a skilled entrepreneur earns a high profit, which allows him to develop the business.
One way to compete is through innovation designed to attract customers. In a relatively short period of the formation of the real estate market in Russia, this was very clearly manifested in the activities of realtors.
In addition to direct competition, entrepreneurs operating in the real estate market find themselves drawn into indirect competition. This is competition between various sectors of the economy and various groups of goods and services. For example, people who are going to buy an apartment may change their mind and buy a car or go on an expensive trip, brick houses can crowd out wooden buildings, retail has an advantage in obtaining a bank loan, as opposed to operations with land plots.
Let's analyze the residential real estate market for its compliance with the type of market structure. According to economic theory, the types of market structures are distinguished on the basis of the following features: the number of sellers and buyers, the degree of differentiation of goods, barriers to market penetration for producers and sellers, price elasticity of supply and demand, the presence of economic profit, and the specifics of competition in the industry.
1. There are many real estate sellers in the residential real estate market: construction companies (in the primary market) - in 2009 in the Russian Federation it is 11%, and in 2011 16% and households (in the secondary market) - in 2009 89%, and 84% for 2011. However, in the secondary market, sellers (households), as a rule, do not act independently, but through intermediaries, which are both small individual entrepreneurs and medium-sized real estate companies. According to the Russian Guild of Realtors, only in Tomsk there are certified realtors (NGSR), as of September 2010 it included 27 companies. Thus, on this basis, the secondary market for residential real estate belongs to the type of market structure "monopolistic competition". The primary real estate market, where the sellers are medium and large firms, and the number of developers is small, has signs of an oligopoly. In addition, such large financial and industrial groups and holdings as:
2. There is a significant differentiation of goods in the residential real estate market. Usually, the secondary real estate market is divided into: old housing, old housing after major repairs, houses of the Stalinist period, Khrushchev, Brezhnevka, panel houses of the 60s and 70s, panel houses of the 80s and 90s, brick houses. "Tomsk has its own unofficial classification, according to which residential real estate is divided into elite housing, luxury houses, apartments with improved planning and standard housing." As for the primary real estate market, "most often they take the Moscow classification as a basis and divide housing into four classes: elite, premium, business and economy." Also, housing of each class is distinguished by the type of material, the area of location (including the environmental situation), the quality of the floors, the size of the rooms, kitchen and other auxiliary premises and, as a result, at prices. The individual characteristics of housing are: floor, view from the window, layout, redecoration, condition of electrical wiring, water supply and heating system, etc., incl. availability of a complete package of documents for the transaction. “Customizing a product makes it even more expensive. The production volumes of individual and serial goods do not reach their economic optimum, that is, the minimum average costs. The product costs the consumer more than in the conditions of perfect competition, but the consumer agrees to “pay for pleasure” to live in an apartment that is more suitable for him in terms of location and layout or in his own house. Thus, according to this criterion, the housing market belongs to the type of “monopolistic competition with product differentiation”.
3. Barriers to entry into the industry. In the primary real estate market, there are high barriers to entry into the industry for sellers (customers, developers). To create a construction company, you must go through the procedure for state registration of a legal entity. Further, for the implementation of activities for construction, design and engineering surveys from January 1, 2010 it is necessary to join self-regulatory organization(SRO) and obtain a certificate of admission to certain types of work. The rest of the barriers will relate to the construction of each new facility separately. According to market experts, the main obstacles to increasing construction volumes are the adoption of Federal law No. 214-FZ "On participation in the shared construction of apartment buildings and other real estate objects and on amendments to certain legislative acts of the Russian Federation" dated 30.12.2004, which grants the developer the right to raise funds from equity holders only if: - a document on state registration by the developer of the ownership of the land under development or the lease agreement for such a plot; - building permits; - the project declaration, which must be posted in the media, since the developer can conclude an agreement for participation in shared construction with the first shareholder only after two weeks from the date of publication. It is also necessary to note other barriers inherent in the primary real estate market: - insufficient number of offered land plots, their high cost and non-transparency of tenders for their sale. Usually 1–2 land plots are offered at the same time per district. Currently, the cost of land plots that a developer can acquire for his own construction of multi-storey residential buildings in the city of Tomsk is differentiated from 230 thousand rubles. up to 1 million rubles. for 1 hundred square meters. As for the prices for plots of land for low-rise individual housing construction both in the city and in the suburbs, the price range here is from 30 to 500 thousand rubles. for 1 hundred square meters; - informal requirements for the construction business in the form of various kinds of social obligations. It is often practiced to allocate a land plot to a construction company for its own construction in a convenient place in exchange for its obligation to build or reconstruct social infrastructure facilities: kindergartens, schools, hospitals, etc. social programs; - the need for a variety of highly specialized equipment (tower cranes of different heights and lifting capacities, piling equipment or pile-pressing installations, concrete mixing plants and concrete-mixing units, concrete pumps, etc.), which is ineffective to buy with a small volume and temporary nature of work, and it has to be rented, which is associated with the risks of lack of market supply. For example, it does not always make sense to purchase a tower crane, since the construction company will have to add several people immediately after the purchase (1-2 crane operators, a locksmith responsible for the technical condition of the crane, an electrician plus additional work for a safety engineer). As a particularly dangerous construction site, the crane must be registered with the city department of Rostekhnadzor, as well as put on the balance sheet of the enterprise. The purchased equipment must be stored under certain conditions and a scheduled inspection must be carried out every 10 months. All these factors significantly increase costs. In addition, for different types of construction work, taking into account the construction conditions, tower cranes with different technical characteristics are needed, which include: lifting capacity, height, boom outreach, free standing on a rail track or on an anchor base with a self-expanding crane tower and the possibility of fastening towers to the building under construction, etc. In this regard, the price range is from 1.5 to 20 million rubles. for the purchase of this construction equipment. The range of prices is also due to the fact that the maximum service life of a tower crane section, depending on the steel grade, is 10–18 years, therefore, a large number of used equipment is offered on the market at a lower price. Renting a rationally selected tower crane will cost the developer from 700 rubles. up to 5000 rubles per machine-hour (from 5600 rubles and more per shift) and will save it from additional costs associated with maintenance, repair, maintenance, storage, forced downtime, etc.; - interruptions in the supply of building materials. Here the most striking example is the "cement crisis" that has gripped the European part of Russia over the past few years. Cement is the main construction material, on the basis of which concretes and mortars are made. The volume of demand for it depends on the time of the year, as in the summer the following are active: industrial and housing construction, repair and reconstruction of large objects; individual housing construction; renovation of apartments; repair and reconstruction of private houses; construction, repair and reconstruction of summer cottages, garden houses and various buildings in the personal subsidiary plots. There is a critical shortage of this material on the domestic market. Indeed, “the growth of the cement market for the year in Russia amounted to 9-12% (world growth - 4-6%). Over the past year, in most regions, this building material has risen in price by 50-60%. In Russia today there are about 50 cement plants, of which seven are large. The total production capacity is 69 million tons. At the same time, the all-Russian consumption exceeds 90 million tons, which unambiguously presupposes a deficit character of the market ”. And if large companies insure themselves against a deficit of cement by concluding long-term contracts with suppliers, then small developers and households have to pay more or, in the event of a complete lack of cement on the market, completely postpone the construction period; - lack of qualified personnel. The choice of educational institutions that train personnel for the construction industry is very limited. On the one hand, the life cycle of a construction company is on average 5–7 years, which makes it ineffective to have the entire set of required expensive non-current assets with a long payback period. At the same time, each company holds a sufficient part of non-current assets that allows it to stay on the market when it is reorganized or a new company is created on its basis. It is also necessary to gain access to new tenders (tenders for the construction of facilities). At the same time, assets must be liquid enough so that, on occasion, they can be easily sold and out of business - this is how companies reduce exit barriers. Usually, construction companies acquire ownership of: low-tonnage trucks (Gazelle car from 300 to 700 thousand rubles, depending on the configuration and year of manufacture), manipulators (from 800 to 2.5 thousand rubles), loaders (from 600 thousand rubles to 5 million rubles depending on the year of manufacture and carrying capacity, power, bucket capacity, etc.), diesel generators and diesel power plants (from 160 to 2800 thousand rubles, depending on the brand, power and other characteristics), excavators (from 1.8 million rub.); geodetic instruments: levels (from 6.5 thousand rubles), theodolites (from 28 thousand rubles), tacheometers (from 250 thousand rubles), etc. All this testifies to the fact that in the construction industry there are often no clear boundaries of the firm and the market, as they are interpreted in the theory of R. Coase. Highlighting certain types works (electrical, plumbing, painting and plastering, production and installation of windows and doors, etc.) into independent firms while maintaining the foundation on the part of the parent company or concluding contracts with independent contractor firms are considered as two acceptable market alternatives that have their own pros and cons ... The creation and maintenance of "own" firms is quite common in the construction business. On the one hand, this provides a more efficient organization of the industry. In addition, maintaining control over these types of work allows us to overcome elements of market uncertainty. On the other hand, such "dispersion" of activities often occurs at the expense of quality. In addition, ancillary firms also have to contract with third parties to ensure the full scope of work and the necessary returns to scale. At the same time, outsourcing individual jobs to the market often guarantees higher quality due to the continued choice of suppliers. At the same time, it generates the risk of non-conclusion of contracts, which means interruptions in construction work. One of the consequences of uncertainty in the construction industry is the lack of clear work schedules and network schedules. They are, of course, developed, but in practice they are rarely followed exactly. Uncertainty in industry production can be viewed as a kind of additional barrier to entry into the industry. The above barriers to entry into the industry for sellers in the primary real estate market are characteristic of the market structures "oligopoly" and "monopolistic competition". In the secondary residential real estate market, there are minor barriers to entry into the industry. Most often, households use the services of intermediaries - real estate agencies. To create a real estate company, state registration of a legal entity is required, however, registration as individual entrepreneur ... The reputation of the intermediary firm, which is its competitive advantage, also plays an important role. The reputation of a realtor is formed from different circumstances of his activity: the time of his presence on the market, the number of offices, the presence of positive and negative reviews in the media, the reflection of activities in professional publications, etc. Some competitive advantage for a real estate company is also participation in a professional association (non-profit partnership) of the RGR and / or NGR. To do this, you must: 1) obtain a certificate of conformity of the brokerage services provided to the requirements of the Standard; 2) own or officially use non-residential premises that have a specially equipped room for negotiations, ensuring confidentiality; 3) conclude a professional liability insurance contract for the seller; 4) obtain a document for the right to use a trademark registered in the prescribed manner, under which brokerage services are rendered. There is a kind of trademark effect in the real estate market - in this business it is very important to have a good history and public recognition. For example, the fact that the Vybor real estate agency was recognized by the results of the All-Russian competition "Professional Recognition - 2011", held by the Russian Guild of Realtors, as the winner in the nomination "Best Brokerage Company in the Home Sales Market 2011" (more than 100 employees) gives the realtor strong competitive advantage. The effect of trust in public opinion and public behavior is here a variation of the effect of joining the majority known from economic theory - without understanding the intricacies of the functioning of the real estate market, non-professional buyers and sellers (households) prefer to contact the agents most in demand on the market or recommended by acquaintances and friends. ... Reputation, trust, brand advantage - all these barriers to entry into the industry are characteristic of the “monopolistic competition” market structure. For non-professional sellers and buyers in the secondary real estate market (households), entry barriers to the market are minimal. So, the seller enters into a preliminary agreement with a real estate company for the sale, which almost does not oblige him to anything. After that, the goods (dwelling) are advertised by the intermediary, shown to potential buyers, negotiations are conducted on behalf of the seller. The agent incurs unpaid transaction and production costs, which largely bind his further behavior. The longer an agent works with a client, the higher these costs are and the more he is interested in making them productive, that is, to complete the relationship with the client by selecting an acceptable sale option and concluding a deal. This is due to the fact that agency services are usually paid at the time of the conclusion of the sales contract or the transfer of documents for registration of property rights. The very same non-professional seller of real estate does not bear the initial costs, which indicates the almost complete absence of obstacles to both entry and exit from market relations. This circumstance brings the household real estate market closer to the type of perfect competition. At the same time, relationships of a detailed kind can be interpreted as a “fuzzy contract” that provides for the danger of opportunism on the part of the least vulnerable party.
4. The elasticity of demand for the price of real estate in general is high due to the high cost of goods (the effect of income), but it differs for different segments of buyers and different classes of real estate. Thus, for people with high incomes, the price elasticity of demand is lower than for people with more low income... The elasticity of demand for luxury and premium housing is lower than for business and economy class housing. In addition, the demand for premium housing is the demand for a complex benefit, including both the apartment itself (living conditions) and individual infrastructure (upon request), and the level of safety (including environmental friendliness) of the area. With integrated construction, a kind of social environment is created - people with the same income, problems and needs will live around. Buyers of elite housing are ready to pay for clubbing (there are no more than 10 apartments in a house), a unified social environment (the seller conducts a strict selection of tenants), location (in the historical part of the city), as well as the location of a house in a prestigious quarter (theaters, museums are located nearby , boutiques), lack of mass infrastructure at home (the house should be deprived of " additional service", Since buyers of elite apartments usually already have their own hairdresser, cook, tennis court, etc.), the presence of a guest parking lot and underground parking (where each apartment has two places for the cars of the apartment owners), a high degree of security for residents (armed guards, video surveillance, entrance plastic cards for residents, etc.), autonomous engineering equipment (own power plant, water supply, heating, fire service, etc.), the use of only the best materials in construction and decoration. The uniqueness of such a product makes other products imperfect substitutes. At the same time, the price elasticity of demand decreases. Also, overpriced square meter(as of September 2011, in Tomsk, the price of 1 square meter of elite housing ranges from 55 to 83 thousand rubles) creates the effect of a prestigious good, interest in which from certain social strata increases, and demand becomes even less price elastic. The price elasticity of demand depends on the purpose of acquiring real estate. According to this criterion, all residential real estate can be divided into two segments. The first is housing purchased as part of a change in consumer choice. The second is housing as an investment commodity, investments in which are made for the purpose of resale (obtaining a temporary price arbitration). For the second segment, the price elasticity of demand is higher, since real estate investments have other investment alternatives. As for the price elasticity of supply, for the first segment it is not high, that is, with an increase in price, there will be no emergence of new sellers. In the second segment, sellers' behavior depends on their expectations regarding further price changes. If, from the point of view of sellers, the price has already reached its maximum, vacant properties purchased for investment purposes will enter the market, which may lead to a decrease in the price. But a collapse in prices can hardly be expected due to the smallness of this market segment. While waiting further growth prices, individual sellers and realtors will "hold" the apartment. Thus, in the second market segment, the price elasticity of supply is higher. Finally, for the primary housing market, the price elasticity of supply is higher in the long run than in the short run. This is due to the fact that the penetration of new manufacturers and sellers (customers-developers) into the market is associated with high material costs and the duration of the construction of a new facility. The improvement in the economic environment in the short term will lead to higher profits for existing developers, but the volume of construction and sales is unlikely to increase significantly. In the long term, competition will intensify due to the emergence of new firms (including re-profiling), which will participate in the distribution of total profits.
5. Features of competition in the real estate market. Considering the great importance of the individual characteristics of housing when choosing it by a specific buyer (quality of housing, living environment, reputation of a developer company or an intermediary real estate company, a developer's guarantee, the provision of property title insurance services, assistance in obtaining a mortgage, etc.), among sellers non-price competition prevails. Price competition in the housing market plays a secondary role and comes into force if the transaction is urgent. There is fair competition in the real estate market, but in modern conditions there are also such features of unfair competition as a decrease in the quality of materials and construction work, violation of the interests of buyers, bribery of officials (in order to obtain various kinds of permits, purchase of plots, etc.), undermining the reputation competitors by spreading false rumors, incl. using the media, industrial espionage and other actions that do not comply with the law and business ethics. The secondary residential real estate market is a typical example of the "lemon market" - goods of different quality with hidden characteristics for one of the parties to the transaction (the buyer) and the presence of the other party to the transaction (the seller) of private information about the quality of the goods offered. As the author of the theory of "deteriorating selection" J. Akerlof has shown, goods with good characteristics ("peaches") disappear in markets of this type, only low-quality goods ("lemons") remain, moreover, with a clearly inflated price. In other words, some properties have been sold for years or have repeatedly returned to the market, where it becomes very difficult for a buyer to find a "peach" among "rotten lemons". Since there is no mass market for "peaches", it is replaced by individual sales, including on the basis of personal connections.
6. Sources of economic profit in the real estate market. For developers, the origin of economic profit is associated with the oligopolistic structure of the market. The possibility of obtaining super profits in the construction industry and the sector of real estate services is determined by the current macroeconomic situation in the country, as well as people's expectations and their assessment of development prospects, the dynamics of household income, the possibility and conditions of obtaining a mortgage loan, etc. From intermediaries (real estate firms) in the real estate market profit is a reward for risk, as well as for overcoming information uncertainty arising from the consumer of services at each stage of the transaction. Also, large real estate agencies can receive speculative profits by making investments in real estate and obtaining temporary price arbitration. Apartments for which the urgency of the transaction is an important factor are especially profitable investment objects. There are also dishonest ways of generating excess profits, the source of which is unfair competition. The study of the characteristics of the residential real estate market according to different criteria allows us to conclude that it is more suitable for the type of market structure “monopolistic competition”, although some of its segments have features of “oligopoly” and even “perfect competition”. In addition, this market is characterized by extreme heterogeneity, which determines the peculiarities of its functioning.
The real estate market has a ramified structure, and it can be differentiated according to various criteria: the type of financial asset, geographical factor, functional purpose and other indicators (Table 4.2).
Primary market in Russia is formed due to newly built facilities and privatization of state and municipal enterprises, land plots, buildings and premises and property rights. It ensures the transfer of real estate into economic circulation. All subsequent transactions are secondary character, since they are associated with resale or with other forms of transfer of objects entered the market from one owner to another.
Organized market- this is economic turnover real estate and rights to it in strict accordance with applicable law with the participation of licensed professional intermediaries. This market guarantees the legal purity of transactions and the protection of the rights of their participants. Unorganized The (street) market does not always ensure the reliability of transactions.
The exchange market is the purchase and sale of objects on the real estate exchange, at tenders and auctions held by funds of the state and municipal property, land authorities, municipal housing committees or specially authorized organizations.
The OTC market is the execution of transactions outside the exchange. It can be organized and disorganized. The organized OTC market is based primarily on the computer communication systems of licensed real estate agencies.
Table 4.2. Classification of real estate markets in a faceted manner
P / p No. |
Classification attribute |
Types of real estate markets |
Type of object (product) |
1. Land. 2. Buildings. 3. Structures. 4. Enterprises. 5. Premises. 6. Property rights. 7. Other objects |
|
Geographic (territorial) factor |
1. Local. 2. Urban. 3. Regional. 4. National. 5. Worldwide |
|
Functional purpose |
1. Industrial buildings. 2. Housing. 3. Non-industrial buildings and premises (offices, warehouses, etc.) |
|
Operational readiness |
|
|
Participant type |
1. Individual sellers and buyers. 2. Intermediate sellers. 3. Municipalities... 4. Commercial organizations |
|
Type of transactions |
1. Purchase and sale. 2. Rentals 3. Mortgages. 4. Material disposition (lease, pledge, etc.) |
|
Industry affiliation |
1. Industrial facilities. 2. Agricultural facilities. 3. Public buildings. 4. Others |
|
Type of ownership |
1. State and municipal facilities. 2. Private facilities |
|
Method of transactions |
1. Primary and secondary. 2. Organized and unorganized. 3. Exchange and OTC. 4. Traditional and computerized |
According to the main criterion - the type of real estate objects - there are at least eight specific markets (see Table 4.2), among which the most developed markets for land plots, residential and non-residential living quarters... As land comes in as needed component in almost any real estate object, let's take a closer look at the structure of the land market, its segmentation and basic parameters.
Land market as a complex independent type of the real estate market, it is customary to divide into relatively homogeneous subspecies or varieties according to intended purpose lands, which are then differentiated according to a number of other characteristics (size, location, etc.) (Figure 4.8).
The next component of the land market is a market segment - a specially allocated part of this type of it, a group of elements that have certain common characteristics (quality of land, distance from industrial centers, etc.).
The most profitable market segment is characterized by:
- o high level of current or expected sales;
- o high rates of growth in sales of land plots;
- o fast turnover of funds and an acceptable rate of return. Market segmentation is one of the most important marketing tools. Success in the competitive struggle largely depends on the correct choice of the market segment.
There are a number of criteria and features that can be used to segment the land market.
The objects of segmentation are buyers, the product itself, the land, and market participants - commercial organizations and entrepreneurs.
The segmentation feature is the factor by which the market segments are distinguished.
Depending on the goals of segmentation, factors characterizing the purchasing behavior of physical and legal entities, parameters of land plots, economic indicators commercial organizations. Currently, real estate firms use multiple segmentation, i.e. segmentation on several grounds at the same time (multi-factor segmentation model).
Scheme 4.8.
and in a certain combination with others, in order to more accurately determine whose and what needs this or that type of land plots satisfies (Figure 4.9).
Segmentation criterion- this is a factor by which the validity of the choice of a particular market segment is assessed. The following criteria are most common: quantitative parameters of the segment, materiality, profitability, compatibility of the segment with the market of the main competitors, efficiency of work for the selected segment, the protection of the selected segment from competitors.
Market segmentation by product- on the ground - allows you to identify which parameters of a particular site may be attractive to buyers. At the same time, such characteristics of lands are used as their quality, remoteness from industrial centers (in Moscow - from the Moscow Ring Road), size of land plots, investment attractiveness, prestige, etc.
So, in the Moscow region, a number of segments began to stand out on the land market, depending on the level of quality.
Scheme 4.9.
- 1. High quality plots - elite. They are purchased by wealthy citizens and large organizations. This includes the lands of the prestigious western directions within the 30-kilometer zone. Comfortable cottages for permanent residence are most often erected on such sites.
- 2. Medium quality plots interested in people with average and relatively high incomes. Their remoteness from the Moscow Ring Road varies from 10 to 60 km; more modest country houses are being built on such sites.
- 3. Low quality lands are purchased by people with low incomes but relatively cheap prices. In such a segment, ecology, infrastructure and prestige lose their impact on consumer behavior. This category of land is located in almost all directions at a distance of over 50 km from Moscow (Table 4.3).
The eastern and southeastern districts of Moscow are not prestigious and ecologically unfavorable, and near the Moscow Ring Road - Kosino, Zhulebino, located near such pollution centers as industrial zones (for example, Kapotnya).
A large differentiation of the land market is also observed in terms of prestige. Ecologically excellent lands are located in the south-west and west of the Moscow region, for example, the banks of the Pakhra river, along the Rublevo-Uspenskoe highway, etc. Kazan direction is unpopular. The lands of the southern and eastern directions are considered unprestigious and unattractive.
The regularity of the influence of the remoteness of sites from the Moscow Ring Road on their prices is generally expressed by the following dependence - the further, the cheaper.
The next sign of segmentation- the size of the plots. Large plots are usually in demand and, accordingly, are valued higher only in prestigious areas. In the general case, the price of a unit of land in large tracts is much lower than that of small plots. At the same time, the cost of one hundred square meters in small and large areas can vary significantly depending on a number of factors.
The degree of infrastructure development has a great influence on the cost. Plots on well-developed land allotments are valued much more expensive than on undeveloped ones. The difference between the prices of developed and undeveloped areas, given the same size, will be approximately equal to the total cost of infrastructure development and capital management costs (the "cost of time" for the development of the site).
Table 4.3. Segmentation of the land market in the Moscow region
Signs |
Market segments |
1. Land quality |
|
2. Distance from MKAD |
|
3. Location |
|
4. Size of plots |
|
5. Purpose |
|
6. Type of ownership |
|
7. Investment motivation |
|
|
|
9. Buyer Behavior |
o Relation to land and nature for growing products: recreation; entrepreneurship, etc. |
Increase in the cost of a land plot depending on the availability of communications,%:
The choice of a market niche also plays an important role, i.e. a small part of it, not occupied or underutilized by competitors and a well-defined circle of buyers.
Housing market segmented by the quality of houses (5-storey - panel, brick, block; mass development - 9-, 12-, 16-, 22-storey, mostly panel; prestigious modern brick and luxury), by the number of rooms (1-, 2 - and 3-room, multi-room apartments), according to layout (typical, improved layout), according to areas of accommodation ( country cottages, at home, etc.).
The housing stock makes up more than 20% of the reproducible real estate in Russia, and taking into account residential buildings in garden and summer cottages - about 30%. The volume of investments in housing construction is about a quarter of their total volume; about 13% of the working population is employed in the construction and operation of housing. Almost 10 million families and individuals live in communal apartments, hostels or rent space from private individuals, over 2 million people live in dilapidated and dilapidated houses, 5-6 million families are waiting in line for improvement housing conditions, millions of people live in cramped conditions - on an area of 5 m2 per person. But only 1.5-2% of those in need of better housing conditions can pay the cost of an apartment or house at a time. According to experts, the cost of housing should not exceed 12-15% of the annual income of a middle-income family. If such a family uses a third of their income to pay off a bank loan with interest, then the purchase of an apartment will take more than 30 years.
The number of residential premises is characterized by 20-30 indicators, including the size of the kitchen, the presence of a balcony or loggia, the layout of rooms, a bathroom, a view from the windows, etc. Apartments located in buildings that meet the following requirements are called elite housing in Moscow. They should be built (or reconstructed) relatively recently (no more than 15 years ago) and located in the Center or in an ecologically clean area adjacent to the Center, or even in a remote area (sometimes outside the Moscow Ring Road), but at the same time there must be an opportunity quickly get to the Center. It is obligatory to have a concierge or security in the house, and, ideally, to guard the adjacent territory. The work of the services responsible for maintaining and maintaining order in the building must be carried out at a high level; it is also desirable to have an autonomous heat and water supply. An increasingly important role is played by the presence of a garage or guarded parking on the territory or in the immediate vicinity of the building (ideally, this is an underground garage). An important sign of elite housing is the absence of persons with a low social status among the residents. The latter can get into high-class apartments during the reconstruction of the building. According to existing norms, the former residents of such houses, resettled at the time of reconstruction, have the right, but after its completion, to move back in. Buying housing in such houses has certain advantages: legal purity deals, the ability to initially decorate your home according to your own taste, a homogeneous social environment.
Houses that meet most of the above requirements are diverse: brick, monolithic, there are even panel houses. Apartments in luxury buildings can be located on one or two levels. The number of storeys of buildings is also different - 5, 9, 10, 12, 14, 17, 22, 26 floors. At the same time, a characteristic feature can be noted - the number of storeys increases with distance from the Center. The infrastructure of elite houses is also different in its development: they can have a sports complex, household services, a swimming pool, a sauna, a winter garden.
The total area of the apartment is 120-150 m2 and more, at the entrance there is a hall of 20 m2 with a small fountain and an aquarium, two bathrooms, a kitchen-dining room of 15 m2, a guest and a master's area on two levels.
The primary housing market is formed and functions at the expense of two sources: the sale by municipal authorities of apartments built with public funds, and the sale of privatized housing by citizens.
In Moscow, to monitor the housing market, 12 indicators of apartments offered for sale in 173 districts, mainly near metro stations, are monitored and analyzed. The monitoring form is presented in table. 4.4.
Table 4.4.
Designations in table. 4.4:
STmes - offer price (in USD) 1 m2 total area on average over the past four weeks;
MINdev (MAXdev) - the minimum (maximum) deviation (in dollars) of the average bid price of 1 m2 of the total area with a 70% confidence level;
ПРмес (ПРкв) - consumer priority of the district for the last month (quarter);
STkv - the offer price (in USD) of 1 m2 of the total area on average over the last 12 weeks;
Ммес (Мкв) is the mathematical expectation of the weekly rate of change in the offer price (in dollars) for the last month (for the last three months);
Yakrat (kered) - short-term (medium-term) risks of real estate transactions. They characterize the share of risk introduced by the uncertainty of the market as a whole. The closer the values I AM to zero (0< I AM < 1), the more chaotic the behavior of the housing market is and the more balanced the manager's decision should be;
PIU is a group of realtor attractiveness, determined by the integral market characteristics district (group names - conditional):
"+++" - extremely attractive;
<<++" - очень привлекательная; " + >> - very attractive; "+/-" - pretty attractive; "- / +" - attractive;
"-" - not very attractive; rather unattractive than attractive (the validity of transactions should be confirmed by factors not taken into account in the analysis); unattractive (the validity of transactions must be confirmed by factors known only to the participants in the transaction);
place in the PIU - the ordinal place of the district in the group of realtor attractiveness, determined by its integral market characteristics.
In the primary and secondary markets of non-residential premises, according to their functional purpose, there are four main segments: production, warehouse, office and retail facilities, general characteristics which is based on taking into account location, area, quality of premises, lease term, price or rent and other factors.
Office premises form the second (after housing) segment of the Moscow real estate market in terms of size, where demand exceeds supply. Depending on the quality characteristics office premises are divided into four classes: A, B, C, D.
TO class A include office space in specialized business centers in the central districts of the city and near major transport routes. All offices in this category are equipped in accordance with Western standards, ranging from the most modern telecommunication systems to climate control systems. The internal premises, buildings and the surrounding area are kept in exemplary condition, there are own management, maintenance and security services, a guarded parking lot.
Office rooms class B have almost all of the above characteristics, but with a smaller list additional services... The rental price is from 700 to 900 dollars per 1 m2 per year.
Class A and B office premises are rented by Western companies and large Russian firms.
The bulk of domestic firms prefer to lease office space of lower quality, related to classes C and D. The first of them is represented by offices in hotels, adapted premises (research institutes, educational institutions, etc.) located outside the city center, but at the intersection of transport highways, near metro stations. Rent rates range from $ 400 to $ 600, depending on the distance from the Garden Ring, the services provided and the terms of the lease.
Unsuitable premises located outside traffic intersections belong to class D. Their undoubted advantage is the ability to obtain an area of the required dimensions for an acceptable fee.
Rental rates vary depending on the type of premises and location.
The warehouse market is differentiated by their type and equipment:
- o specialized warehouse complexes equipped with modern technical means, heating and other amenities;
- o modern equipped hangars;
- o basements and semi-basements;
- o first floors of various buildings;
- o converted bomb shelters;
- o other premises.
Enterprises as property complexes are still entering the primary real estate market in the process of privatization of state and municipal property.
The construction-in-progress market is formed at the expense of municipal and private facilities that are not provided with financial, material and labor resources. It is based on the principle of mutual benefit - an agreement on a 50% distribution of the constructed space between the investor and the owner (city, company).
The cottage market is rapidly developing in all regions of the country. In the Moscow region, for example, 160 thousand cottages have been built on an area of about 48 thousand hectares at the expense of private investments on the terms: 35% of cottages are received by the investor, of which 15% he sells at closed auctions to local residents, 40% is bought by Moscow at cost price, and 10% is donated to the city and region.
In conclusion, it should be emphasized that the functioning of the real estate market contributes to the development of the country's overall economic turnover (Figure 4.10).
Scheme 4.10.
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