Wedoany.com Report-Apr. 17, Russia’s housing market may face a shortage of up to 30 million square meters by 2027, driven by a significant decline in new residential construction, the country’s housing and development financing agency. In the first quarter of 2025, new housing projects totaled 8.1 million square meters, a 24% drop compared to the same period in 2024.

New housing projects in Q1 2025 totalled 8.1 million square meters.

The downturn is expected to continue through 2025 if the Central Bank maintains its current 21% key interest rate and housing sales remain low. Even if the rate decreases to 7.5-8.5% by 2027, the construction sector may struggle to meet demand quickly enough to avoid a shortfall. High financing costs and the expiration of a subsidized mortgage program in July 2024, which offered rates as low as 8%, have led developers to focus on smaller, high-profit projects.

Anna Akinshina, CEO of Russian real-estate company Samolet Group, noted the shift in developer priorities due to these financial constraints. The market is already feeling the impact, with DOM.RF reporting that only 569,000 apartments were sold nationwide in 2024, a 26% decrease from the previous year.

While an oversupply exists currently, experts caution that a housing deficit could emerge by 2027, particularly in Moscow, its surrounding regions, and Russia’s Far East. To address the potential shortage, DOM.RF has proposed subsidizing loans for developers launching new housing projects in 2025 and 2026. However, analysts emphasize that achieving long-term balance in the housing market will also require broader economic stability and sustained reductions in borrowing costs.

The combination of high interest rates, reduced construction activity, and changing developer strategies highlights the challenges facing Russia’s housing sector. Efforts to stimulate new projects and stabilize financing will be critical to meeting future demand and preventing a significant shortfall in residential properties.