Russia may face a major housing shortage by 2027, with a potential deficit of up to 30 million square meters due to a sharp decline in new residential construction, reported the Moscow Times, citing a report of the government’s housing and development financing agency, DOM.RF.
New housing projects in the country in the first quarter (Q1) of 2025 totalled just 8.1 million square meters, marking a 24% decrease compared to the same period last year.
This downturn is projected to persist until the end of 2025 if the Central Bank maintains its high key rate and sales remain sluggish.
Even with a potential reduction in the Central Bank’s key interest rate to 7.5-8.5% from the current 21% by 2027, the Russian housing construction industry is unlikely to recover swiftly enough to satisfy demand.
Rising financing costs and the recent conclusion of a subsidised mortgage programme, which offered interest rates as low as 8% but expired in July 2024, have compelled developers to prioritise smaller, high-margin projects, according to Russian real-estate company Samolet Group CEO Anna Akinshina, reported by Vedomosti.
The market is already experiencing the effects of the slowdown. DOM.RF reported that just 569,000 apartments were sold nationwide in 2024, a 26% decline from the previous year.
Although there is currently an oversupply, experts warn that a housing shortage could materialise by 2027, especially in Moscow, its surrounding areas, and the Far East of Russia.
To mitigate the potential shortfall, DOM.RF has suggested subsidising loans for developers initiating new housing projects in 2025 and 2026.
However, others say that broader macroeconomic stability and a sustained reduction in borrowing costs are also essential to re-establish equilibrium between supply and demand in the domestic housing market.
