Home stop: debt burden on the construction sector has reached almost 500%
The construction sector in Russia is becoming a zone of acute crisis, which may last for two to three years, experts from the Center for Macroeconomic Analysis and Short-term Forecasting predict (Izvestia has reviewed their report). Among the reasons are the record high key interest rate, the reduction of budget support and the tightening of mortgage conditions: now the debt of developers is almost five times their profit. Deadlines for the completion of facilities are already increasing — the largest developers are building 2.4 million square meters with delays. m housing. This threatens to increase prices, a shortage of apartments in the regions and risks to the economy as a whole. What does the cold winter have to do with it and whether a business can avoid a pessimistic scenario is described in the Izvestia article.
Why is construction in Russia stagnating
Investment activity in Russia began to decline in early 2026, according to the CMACP report "Analysis of Macroeconomic Trends." Analysts admit that part of the decline is due to the unusually cold winter in the European part of the country. However, even without taking into account the seasonal factor, they assess the current level of investments as "very low".
One of the main reasons for the deterioration of the situation in the CMACP was the long-term ultra-rigid monetary policy. Construction was particularly affected by the problems. According to the center, the decline in the sector has consolidated: if in January the decline was 5.5%, then in February it was another 1.1% seasonally adjusted. Analysts attribute this to the tightening of mortgages, high interest rates and budget spending cuts. In their opinion, the construction sector is becoming a zone of acute crisis, and for a rather long period — for two to three years. Izvestia sent a request to the Ministry of Construction.
Additional pressure on the business is exerted by the increase in loan servicing costs. According to the CMACP, companies are already allocating 37% of profits to interest payments, which is a historical maximum. The highest debt burden is observed in mechanical engineering, woodworking, the service sector and, again, in construction. In the latter sector, companies' net liabilities reached 481% of EBITDA (reflecting earnings before interest, taxes, and depreciation). In other words, the total debt of construction companies is almost five times their profit.
The debt-to-EBITDA ratio is one of the most important indicators for investors. The coefficient shows how well the company is credited and able to service its obligations. A level up to 2-3 is considered comfortable, above 3-4 already signals risks, and values above 4 indicate a high probability of problems with payments.
The decline is related to the specifics of the industry, explained Alexey Ravinsky, CEO of Zapusk Group. According to him, developers have to invest heavily in land purchases, design, infrastructure, and contract work long before they receive revenue. At high rates, the cost of such a cycle increases dramatically, and a significant portion of income goes to debt servicing.
Rosstat data also confirms the difficulties in the industry, said Natalia Milchakova, a leading analyst at Freedom Finance Global. In January 2026, Russian construction companies found themselves with a minimum supply of contracts - less than a month in advance.
At the same time, in the first quarter, the volume of construction work decreased by 10% compared to last year. Natalia Milchakova attributed this to the abolition of preferential mortgages, stricter conditions of the family program and high rates on market loans. At the same time, she estimates that about 75% of new housing in Russia is sold using loans.
A reduction in new project launches, which was previously warned by Deputy Prime Minister Marat Khusnullin, is already being observed in a number of regions of Siberia, Central Russia, the south and the Volga region, the analyst added. New housing starts there fell by 10-65% year–on-year in January-February. At the same time, in the capital, the Moscow region and St. Petersburg, the number of new buildings, on the contrary, increased due to pent-up demand.
The risks of freezing construction projects will remain until the mortgage market fully recovers, Natalia Milchakova believes. According to her, signs of a lack of financing are already noticeable in infrastructure projects. Thus, the deadlines for the commissioning of the Dzhubga–Sochi highway and a number of regional infrastructure facilities were postponed. This is due to the lack of funds both in local budgets and at the federal level.
Are there any risks of shortage of apartments
The construction market is currently undergoing a period of adaptation to the new economic reality, but it is premature to talk about a systemic crisis in the entire industry, says Andrey Fetisov, head of the development company Wednesday. According to him, the market is rather moving towards a more balanced development model, where the key role is played by the quality of projects, a well-thought-out financial model and a high degree of readiness of facilities.
Developers are already taking a more cautious approach to launching new queues and are reviewing the pace of housing entry into the market, the expert noted. First of all, this applies to projects with weak economies or an insufficiently developed concept.
Housing affordability remains a separate problem, says Andrey Poltarykhin, Professor of the Department of Innovation and Industrial Policy Management at Plekhanov Russian University of Economics. High market mortgage rates limit the possibilities of some buyers, especially young families and those who purchase their first home. However, according to the expert, this does not mean a decrease in the long-term interest of Russians in real estate.
At the same time, the construction industry will continue to play an important role in the economy, as it is associated with the production of building materials, transport, the banking sector, employment and infrastructure development, Andrey Poltarykhin noted.
At the same time, an increase in construction costs and a reduction in supply can push prices up, says Natalia Milchakova from Freedom Finance Global. According to her estimates, the cost of apartments in the budget segment may increase by 10-12% by the end of the year, especially in the regions.
At the same time, it is too early to talk about a large-scale deficit, the expert stressed. The most difficult situation is in certain regions of the south, the Volga region and the Far East, where household incomes remain low and the debt burden is high. In the whole country, the ratio of housing sales and construction readiness in 2025 was 73%, which is close to the optimal range of 60-80%.
As previously reported by Izvestia, housing shortages are already observed in 21 regions of Russia, including a number of subjects of Central Russia, Chuvashia, Kalmykia and Mordovia. In addition, more than 15% of the housing being built by the top five largest developers is being built with delays. The total volume of such facilities reached 2.4 million square meters. m. The editorial board sent requests to the largest developers.
The downturn in construction poses risks for related industries as well, emphasized Alexey Ravinsky from Zapusk Group. According to him, the decline in activity in the sector inevitably affects industry, transport, employment and overall economic growth.
What will improve the situation
Measures to reduce the cost of financing for both developers and buyers could support the sector, says Kristina Gudym, an analyst at Finam Financial Group. According to her, we can talk about subsidizing mortgages, targeted support, the development of project financing mechanisms and stimulating demand.
Natalia Milchakova holds a similar position. She believes that reducing the key interest rate to at least 12% per annum, easing the requirements for preferential mortgages and expanding support programs to new categories of citizens — young doctors, teachers and scientists - would help improve the situation. In addition, the expert suggests developing a market for long-term rental housing with the right to purchase and installment programs from developers.
In general, the next two to three years will be a period of severe restructuring for the construction market: the industry will have to abandon the model of rapid growth on cheap money and move to a more sustainable development, where financially disciplined and well-developed projects will survive.
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