Housing Market: Current State and Prospects

The housing market in Russia is considered overheated due to rapid price growth, yet developers are complaining about a lack of demand. Participants in the Bank of Russia’s Financial Congress discussed the state of and prospects for the Russian housing market at a session moderated by Elizaveta Danilova, Director of the Bank of Russia’s Financial Stability Department. Econs provides excerpts from the discussion.

Market 2026: Overheating, Decline, or Balance?

The annual price growth for new construction remains high – it amounted to 12.1% across Russia and 17.7% in Moscow in April 2026. An important indicator, the ratio of sales to construction readiness, which shows how quickly apartments are sold as buildings are built, remains at about 70%, which fits within the ‘ideal’ range of 60–80%. The reduction in rates has led to an increase in the share of mortgage market: in May 2026, it reached 45% – a two year high, according to Elizaveta Danilova.

Meanwhile, the launch of new housing decreased by 11%, which poses a risk of reduced supply and rising prices in the future. At the same time, developers say that the market is oversupplied, the moderator explained.

Nikita Stasishin, Deputy Minister of Construction, Housing and Public Utility Services

– Currently, we have about 118 million square metres under construction, which are being built with the involvement of citizens’ funds and escrow accounts. Of this volume, 31% has been sold. It is a slow-moving sector: it takes about a year from the moment the land is purchased to obtaining planning permission, so developers actually have no choice but to start work on what they have already bought and designed. Considering the situation in the housing construction market, it is crucial to have all essential documents ready, so that when market conditions improve to launch new projects, the preparation takes not a year, and not half a year, but minimal time.

As for oversupply, the situation differs greatly in each region of the country. Moscow is an absolutely autonomous market for primary and secondary housing. In Krasnodar, however, no more than 22–23% of the 8 million square metres of housing currently under construction has been sold. Is there oversupply there? Of course there is.

Dmitry Timofeev, Deputy General Director of PIK Group:

– We assess oversupply by three parameters: 1) the launch-to-sales ratio: for project financing purposes, the standard range is 125–170%; 2) the sales rate relative to construction progress: the standard range is 60–80%, as this level, on average, allow the project financing debt to be fully repaid using funds held in escrow; 3) the timeframe for selling unsold properties: the standard is 2–3.5 years.

Considering these figures, by the end of 2025, the market had almost collapsed, with a sales cycle lasting approximately 3.5–4 years and a launch-to-sales ratio of roughly 190%. But the situation stabilised somehow in the first quarter of 2026.

Ivan Larionov, Deputy Chairman of the Management Board at Bank DOM.RF:

– Another important parameter is the ratio between deposits into escrow accounts and withdrawals for construction and fitting-out works (which reflects the balance between the money that co-investors pay for their flats and the amount that the developer actually spends on building the block using a bank loan). If these two indicators work synchronously, the rate for developers decreases. This parameter is currently 80%, meaning the level is balanced and financially sustainable, and the market has balanced. The sales-to-construction-readiness ratio suggests that projects are well-sustained. There is no doubt that there are problems with oversupply in certain areas. Speaking of Krasnodar Territory, the main reason is the focus on small apartments, one-room apartments, and studios. The investment calculation fails to provide a convincing justification, suggesting that these apartments will likely remain unsold for a substantial amount of time.

Alexey Leipi, Director of the Domklik Department of Sberbank:

– Comparing 2024 and 2025, we see market growth of 20%. This year, we predict 10% growth, which under current conditions is a truly excellent outcome. Meanwhile, the supply has increased from 70 million to 83 million square metres. In 2024, sales-to-construction-readiness reached 78%, but it decreased to 70–72% in 2025 and is now stabilising at 75–76%. However, six out of 40 focus regions are experiencing difficulties, including Krasnodar Territory and Primorsky Territory.

The market has been in a state of permanent adaptation in recent years. Citizens are also adapting. Remember the period when our first state mortgage support programme was closing – loan issuances reached 11,000 per day. Recently, the media has talked about the possible change in the family mortgage rules – we have not seen any rush. Consumers now realise that there’s no point in trying to jump on the bandwagon at the last minute.

Market Price Gap

Elizaveta Danilova:

– The gap in average prices between the primary and secondary markets as of 1 April, according to Rosstat, was 52%. But we realise that this is, to a large extent, a ballpark figure. Our estimates for comparable apartments showed that, without considering repairs, the difference is 9%, with repairs it rises to 18%. But where does the gap come from? The gap largely stems from the ‘0% mortgage’ programmes that banks and developers launched four years ago by artificially inflating prices. The mortgage standard now prohibits it. Because if, for example, a person needs to sell their home in the coming years, it would only be possible on the secondary market with significant losses. But now, they are advertising 12% rates when the market rate is 18%. Is this a hidden discount or marketing?

Marina Zabotina, Director of the Mortgage Business Department at PSB Bank:

– These programmes entail the developer subsidising the rate. The mortgage standard prohibits lowering the rate by inflating the price, and we monitor this. The 12% rate is the threshold at which a borrower can still take a mortgage. It is a transitional bridge from preferential programmes to market ones. The housing market is starting to adapt to the fact that there will not be as many preferential programmes.

Aleksey Leipi:

– The share of subsidised programmes used by developers has significantly decreased. If, for example, in 2024–2025 it reached 50%, now it is 25–27%. On the other hand, it can also be a useful tool during challenging periods.

Instalments: Opportunity or Danger

Elizaveta Danilova:

– At the Financial Congress a year ago, we talked a lot about the risks of instalments. The data shows that citizens’ debt to developers – the outstanding portion of co-investment agreements – grew from almost zero at the beginning of 2024 to ₽1.5 trillion by July 2026. We are concerned that people take out instalment plans for 2–3 years expecting to then get a mortgage, but obtaining a mortgage is not guaranteed. And even if a person gets a mortgage, the debt burden will prove to be too heavy.

Aleksey Leipi:

– The ₽1.5 trillion of debt on co-investment agreements is 15% of the entire project financing portfolio. Our task is to ensure that these one and a half trillion do not backfire on developers. The shift from instalments to mortgages accounts for approximately 10%. But a comparable figure – 10–15% – is made up of those who fail to complete their instalment plans. The tool definitely requires greater transparency. And it definitely requires control and management.

Marina Zabotina:

– We went to the developers ourselves and explained, ‘Don’t assume that we’ll grant a loan to every one of your co-investors.’ We even suggested including clauses in co-investment agreements that other loans cannot be taken during the instalment period, otherwise a mortgage will not be granted. The main problem is the lack of information about instalments in the credit history bureau. A client may take out consumer loans, and we won’t find out about it until they come to us for a mortgage.

Nikita Stasishin:

– Today, banks are no different from property developers in their property development activities: marketing, product. This is precisely how we envisaged the 2019 reform of project financing and escrow: the banks must take all necessary measures to ensure that projects are completed, people receive their apartments, and anyone wishing to withdraw their money from the escrow account is able to do so. And the banks understand what to do if something happens to the developer, together, of course, with the regional authorities and under our coordination. We have agreed with the developers that they will carry out a study into excessive practices on the part of the banks. Taking advantage of the fact that we are at a banking congress, I propose that the banks conduct a reciprocal study within a month into excessive practices on the part of the developers.

Dmitry Timofeev:

– Colleagues, let’s admit that the central bank holds the second key to regulating the housing construction sector – through macroprudential limits and reserves. Project loans finance 98% of construction. In 2023, the central bank introduced a new procedure for calculating provisions (link in Russian) for ‘0% mortgages’ [the provision is increased by 30% if the total cost of credit is below the market rate by more than 1/5, and by 50% if it is below by more than 1/2. Now, even if a developer comes to a bank with a sales model that includes this ‘zero-interest mortgage’, no bank will simply agree to it. And as for instalments, the central bank can easily limit them.

Ivan Larionov:

– The financial model must take into account the specific features of instalment plans. The majority of instalment plans are for more upmarket projects, where the risks are lower. We see that almost all instalment plans are paid off within three years, and the proportion of agreements terminated at our bank is even lower than the average.

Elizaveta Danilova:

– My personal impression is that things are going quite well in the market. The situation is under control. The banks and developers are committed to transparency and are endeavouring to assess risks. The share of ‘bad debts’ among developers is much lower than in the corporate portfolio as a whole. Accordingly, the optimal strategy is to finance the completion of buildings in any case. Consequently, there is no risk that citizens will not receive their apartments.