Developers curtailing the launch of new housing projects
In the coming year, housing construction volumes are expected to drop by one-third, experts forecast.
Weak demand in the housing market against the background of unaffordable mortgages will lead to a decrease in new project launches, experts warn. It is expected that the volume of housing construction in the country will decrease from 48 million square metres in 2024 to 30-35 million square metres in 2025. Tatarstan developers confirm these forecasts. The previously announced projects will be launched only “under the condition of a favourable economic environment," developers specify. Read the details in the material of Realnoe Vremya.
“Developers are considering slowing down their projects”
In the face of a significant decline in sales without affordable mortgages in the real estate market, developers have taken a wait-and-see attitude. The record high key rate of the Central Bank and the rise in the cost of project financing also became a deterrent.
“The key rate directly affects the cost of money and how willing developers will be to start new projects. These factors, in turn, will affect the performance in 2-2.5 years," agrees Galnur Valeeva, the commercial director of Unistroy company.
Developers have already begun to restrain the withdrawal of new projects. Moreover, this trend is observed throughout the country. For example, in St. Petersburg, a total of 5.4 million square metres of housing are being built in January this year, or by 18.4% less than in the same period of 2024, and by 28.8% less than in January 2023. Compared to the beginning of 2022, the current construction volumes in the Northern Capital have already decreased by 63.5%.
“The pace of construction in the republic will be reduced”
There are no January data on the number of building permits issued in Tatarstan yet. However, real estate market participants themselves predict a significant decline in housing construction volumes. According to them, there are no prerequisites for improving the situation yet:
Over the past five years, the cost of construction in Russia has increased by 76%, the federal developer RKS Development estimates. Building materials, construction workers' services and special equipment also rose significantly in 2024, with individual items increasing by 20% at once. For example, the category “work and mechanisms” increased in price by 18.3%, “facade, roofing, translucent structures” — by 13.2%, “fittings and metal” — by 8%.
The difficult situation in construction was also discussed at the final press conference of the rais of Tatarstan. Will the republic be able to continue implementing the housing plan in such conditions? “We can build housing, there is no doubt. That year, there were 110 million square metres in Russia. The question is, without the tools to implement the mortgage, this project will either slow down or accelerate," admitted Rustam Minnikhanov. “We see that the number of mortgage loans has already decreased by 30%, and the bank rate is high. This is temporary; everything will pass, the economy will stabilize. However, there will be a certain decline for now, and we need to be prepared for it.”
Earlier, the Ministry of Construction of the Republic of Tatarstan, reporting a decline in sales of new buildings and the withdrawal of a number of developers from the Russian market, noted that “the situation in the republic is stable so far”. Meetings with developers are held periodically to discuss current construction projects together. As for new housing projects, some companies have decided to delay their global plans, while others are cautious.
Thus, the specialised developer IQ Development (part of SMU-88 Group), which in that year purchased the municipal enterprise Urban Improvement base from the Kazan Executive Committee for 346.9 million rubles, announced plans to build a residential complex on this land with an area exceeding 11,000 square metres. At the same time, the developer clarified that they plan to launch the project in 2025, subject to a favourable economic environment.
Weak demand will reduce the launch of new projects
In the coming 2025, the volume of housing construction in Russia will decrease by about a third: by 27-38%, Dom.RF forecasts. Analysts estimate that the figures will fall from 48 million square metres of housing to 30-35 million square metres.
“The accumulated sales reserve will allow developers to guarantee completion of projects with commissioning in 2025, but weak demand will lead to a decrease in launches, as a result, the risks of falling housing commissioning from 2027 will increase," the state-owned company believes.
Experts attribute the low demand for residential new buildings to high mortgage interest rates. In their opinion, market mortgages are likely to remain unavailable throughout 2025, as the Central Bank's average key rate for the year will be about 20%.
Predicting the overall situation for the next two years, analysts announced a reduction in mortgage issuance and the launch of new projects. Thus, in 2025, the volume of issued housing loans is expected to drop to 1–1.2 million units, amounting to a total of 3.8–4 trillion rubles. For comparison, in 2024, Russians took out mortgages totalling 5 trillion rubles. The recovery of the mortgage lending market is predicted no earlier than 2026, subject to a reduction in the key interest rate.
The cost of a square metre of housing will continue to grow, experts say. New buildings will rise in price at the rate of inflation, and in the secondary market — slightly above it, as demand in this segment will be supported by cash transactions.