Russia’s New Housing Demand Collapses Amid Mortgage Cuts and Rising Rates
Demand for newly built housing in Russia has plummeted nearly 40% over the past year, as government support for the real estate sector fades and interest rates continue to climb.
According to figures reported by Vedomosti, from July 2024 to July 2025, only 458,727 newly built apartments were sold across the country, with a total floor area of 21.9 million square meters. That marks a 38.7% drop in the number of units sold and a 37.2% decline in total space compared to the previous 12-month period.
Analysts attribute the steep fall to the rollback of key state programs that had previously helped sustain the housing market during years of economic stagnation and sanctions. In particular, the cancellation of the government-subsidized mortgage program in 2024 removed one of the few remaining mechanisms keeping buyer demand afloat.
“The decline was expected,” said one market expert. “The state sharply reduced its involvement in housing support — first by canceling the preferential mortgage, and then by tightening access to family mortgage programs. When you combine that with a rising key interest rate, it becomes harder and more expensive for people to borrow.”
Indeed, Russia’s central bank has steadily increased its key rate over the past year in an attempt to tame inflation, pushing up the cost of home loans. At the same time, banks have become more cautious in issuing long-term consumer credit amid economic uncertainty and Western sanctions that continue to disrupt Russia’s financial system.
The construction sector — once considered a reliable engine of domestic growth — is now showing signs of serious strain. Developers have already started delaying new project launches, and some regional markets have seen double-digit declines in both prices and activity. In many cases, private demand has evaporated faster than state-linked or subsidized projects can compensate.
Still, some analysts suggest the market could partially recover if the government reintroduces targeted support measures. However, with a growing share of state budget funds redirected toward defense and security spending, few expect housing subsidies to return to previous levels.
The result is a housing sector entering a period of contraction, after years of artificial growth driven by public financing. Without renewed stimulus or meaningful wage growth, Russia’s housing market — especially new construction — may remain frozen well into 2026.
