Developers in Russia are pulling back on new residential projects in response to the shrinking demand and growing construction costs. The development market in Moscow and the Moscow region shrank 5-19% in 2024; in other regions, the decline was between 17 and 29%. By cutting down on housing starts, developers can avoid overstocking and keep prices down. The market is expected to continue cooling in 2025, as analysts are projecting a 20-25% slowdown as the baseline scenario.

In 2024, according to Metrium consultancy, Moscow developers put 67 new residential complexes on the market, as new home construction slowed down by 5.6% year-on-year, to its slowest pace since 2020. The total footprint area of the competed buildings was 3.9 mln sq m, down almost 4% from the year before.
The decline was most noticeable in the mass-market housing segment. In Moscow, only 11 such projects were delivered over 2024, or 26.7% less than a year earlier, Metrium reports. On the contrary, new business class projects surged by 62,5%, with 26 such complexes built last year. Admittedly, 2024 was challenging for the industry as the government cut down on the preferential mortgages program and upped the key rate to an all-time high.
“However, as long as prices do not drop by a bigger percentage than down payments on mortgages as percentage of the total purchase price, the current real estate market contraction is unlikely to cause a mortgage crisis,” economist Sergei Khestanov, Associate Professor at RANEPA, said. “The future of specific developers will depend on their debt load,” the expert added.