Russia's Housing Market Faces Collapse: A Looming Shortage and the Government's Response

Russia Faces Looming Housing Crisis Amidst Construction Slowdown and Mortgage Rate Hikes MOSCOW, May 25, 2025 – Russia's housing market is facing a potential crisis, with a significant decline in new construction projects and mortgage lending raising concerns about a future shortage. The cancellation of government-backed mortgage subsidies and a sharp increase in interest rates by the Central Bank have created a perfect storm for the industry. According to the video, new construction projects have dropped by 23%, while mortgage lending has plummeted by approximately 40%. This has left developers with substantial debts, estimated at 4.6 trillion rubles, much of it at floating interest rates. One expert interviewed in the video noted, "The mortgage rate of 30% is a reality at the beginning of 2025, a situation the market hasn't seen since the 2000s." This has led to a 22% decrease in sales of newly constructed homes across the country. The government is responding to the crisis, with President Putin calling on the government and the Central Bank to implement appropriate measures. These include temporary interest rate subsidies for project financing, particularly for smaller cities. The goal is to prevent a housing deficit. The DOM.RF agency predicts that by 2027, Russia could face a shortage of 30 million square meters of housing, primarily impacting Moscow, the Moscow region, and the Far East. Despite the challenges, the government's proposed measures may help mitigate the severity of the crisis, offering a glimmer of hope for the future of the Russian housing market.