More than 30 Russian regions are now grappling with severe overstocking in new-build apartments, as supply far outstrips effective demand across regional markets. With developers unable to curb excess inventory by halting new projects, market players are banking on a Central Bank rate cut to revive mortgage lending and stabilize the sector.
According to Alexei Gusev, CEO of Glavstroy Realty, developers launched multiple projects in cities with limited demand, banking on steady growth – only for supply to outstrip effective demand.
“This led to problems selling apartments under construction,” the expert emphasizes.
Data from the Dom.RF state analytical center shows that new-build apartment sales across Russia fell 16% year-on-year, to 9 mln square meters in January-May 2025. Yet, despite declining volumes, rising housing prices cushioned developers’ revenue losses, limiting the overall drop to just 2% (RUR 1.9 tln, or $24 bln).
With the current key rate, developers are increasingly struggling to meet sales targets as unsold inventory grows, notes Ruslan Syrtsov, Managing Director at Metrium. However, the market is a self-regulating system, he adds, pointing to a pronounced drop in new project launches.
Dom.RF estimates show that developers introduced just 15 mln square meters of housing in January-May 2025 – a 20% year-on-year decline. Yet, Ricci Consultants warn that even this reduced volume exacerbates the overheat, given existing oversupply. As of May 2025, unsold units account for 68% of housing under construction (up from 65% in 2024), according to Dom.RF.
Despite this, developers are in no hurry to reduce prices. Construction companies are limited in their ability to lower prices due to the specifics of project financing using escrow accounts, Ricci notes. Since buyers’ funds remain frozen until the property is commissioned, price reductions become financially impractical, the company’s analysts explain.
“As long as prices don’t drop by around 20%, there’s nothing particularly alarming about the cooling real estate market,” says economist Sergei Khestanov, Associate Professor at the Russian Academy of National Economy and Public Administration (RANEPA). “However, if prices fall more sharply, the value of many mortgaged apartments may not cover the outstanding debt, which could create conditions for a full-scale mortgage crisis,” the expert warns.