Set up for the worst: developers are experiencing the longest recession in ten years
The housing market in Russia continues to cool down — the volume of construction work has been declining for the fifth month in a row, according to Rosstat data, which was studied by Izvestia. At the same time, the pace of housing commissioning is slowing down, and many projects are being completed with delays. High rates, rising construction costs and weak demand are already creating problems for developers. An additional risk factor will be the change in the terms of the family mortgage in October, a program that remains the main driver of the new building market. Whether apartments will become cheaper due to problems in the industry is in the Izvestia article.
Why does construction continue to decline
The volume of construction work in Russia in January – May 2026 decreased by 7.4%, according to Rosstat data. The indicator has been continuously decreasing for five months. This is the longest decline in the industry since 2015-2016, Izvestia found out. At the same time, almost 22% less housing has been commissioned since the beginning of the year than in the same period of 2025, according to Rosstat data.
The maximum drop in the volume of construction work over the past 10 years was recorded in 2015 — by 3.9%, and housing starts in 2016 - by 6%, said Natalia Churkina, an analyst at the Institute for Integrated Strategic Studies. At that time, the market was under pressure from currency fluctuations, high inflation and a sharp rise in the cost of loans, added Peter Arronet, chief analyst at Ingo Bank. The current rate of decline, according to experts, indicates a much deeper cooling of the market.
The situation may be even worse in some market segments. For example, large infrastructure projects (transport corridors, industrial centers, ports) are supported by the state, and they are not so strongly influenced by the general situation, said Oleg Nikolaev, an expert at the Stolypin Institute of Growth Economics. The burden is growing most significantly on housing construction, which is particularly dependent on public demand.
And buying an apartment is now, in principle, more difficult due to difficulties with obtaining a mortgage. Preferential programs remain the main driver — according to the Central Bank, they account for 55% of all housing loans. The market is very dependent on any changes in their conditions.
So, since February 1, the "one preferential loan per family" rule has been in effect. After that, the demand for new buildings decreased, and developers began to postpone the launch of new projects, explained Mikhail Kurdyukov, director of the audit and consulting group Unicon.
Starting from October 1, a new tightening of family mortgage conditions is expected. Izvestia previously reported that rates for couples with one child could rise to 10-12%, which, in fact, would make it impossible for almost 3 million families to get affordable credit. Conditions may be adjusted, but the general trend towards reducing the availability of the program will continue.
In addition, mortgage issuance is declining due to the Central Bank's limits for borrowers who spend more than half of their income on debt servicing. Against this background, banks refuse 60% of applications for housing loans.
The decline in mortgage approvals eventually cools the entire construction market due to falling housing demand.
At the same time, the main factor of pressure on the industry remains the high cost of loans, said Peter Arronet, chief analyst at Ingo Bank. Now, in principle, all new houses are being built with borrowed funds, because the money of equity holders is frozen in special accounts until the facility is completed and cannot be used by developers.
In such conditions, launching new projects often becomes economically unjustified, Mikhail Kurdyukov concluded.
What is the danger of a prolonged recession in the construction industry?
The problems in construction are gradually affecting related industries. Developers remain major customers for metallurgy, building materials manufacturers, transport companies and other sectors of the economy, so the decline in activity in the housing market has an impact far beyond the construction sector, warned Viktor Zubik, founder of Smaren management company.
The consequences are already noticeable. Thus, in January – May, cement production decreased by 16.2% compared to last year, ferrous metal structures — by 8.7%, and plywood — by 11.6%, the Institute for Integrated Strategic Studies reported.
In addition, a prolonged recession increases the risks for home buyers. According to the Unified Resource of Developers (ERZ), the share of projects with postponed deadlines increased by almost a third over the year and reached 12.6%. Now, even the largest market participants find it really difficult to complete projects on the originally planned dates, the financial adviser and founder of Rodin emphasized.Capital Alexey Rodin.
At the same time, a decrease in market activity does not mean that housing will become cheaper. Developers still have high costs for land, materials and financing, so there are limited opportunities to reduce prices, experts said. In addition, a sharp drop in the cost of apartments may worsen the economics of projects and the conditions for raising funds for project financing from banks. Therefore, a noticeable decrease in housing prices in large cities should not be expected in the near future.
When to expect the housing market to recover
The return of the construction market to growth will largely depend on a reduction in the key interest rate. As long as loans remain expensive, developers will launch fewer projects.
The market may revive a reduction in the key rate to at least 10%, however, such a scenario is likely to be realized no earlier than in one or two years, Alexey Rodin believes.
However, by the end of the year, the market is waiting for another shock in the form of changes in the conditions of the family mortgage. Reducing the availability of the program increases the risks of hypothermia in the industry, Viktor Zubik from Smaren believes. In this situation, it is also important to further reduce the key and increase the availability of mortgages at market rates, as well as the overall growth in real incomes of the population.
The construction industry is also very dependent on the predictability of market rules. To restore it, it is important that developers can understand the regulatory conditions in advance, otherwise it becomes difficult to plan investments and launch new projects, said Alexey Akindinov, Chief Operating Officer of the Aeroplane Group.
At the same time, there is no need to talk about a mass shutdown of the industry. Developers continue to launch new projects, although they have become much more cautious about assessing their economics and timing of entry into the market, said Yulia Solodovnikova, head and managing partner of the REPA Association. Companies are now more focused not on rapid growth, but on financial stability and facilities with the most predictable demand.
As a result, the market is gradually shifting to a new development model, Nikita Bakhcheev, Managing Partner of Promplan Group, concluded. Having survived the crisis, the industry will depend less on large—scale preferential programs and more on real demand, project effectiveness and new financial mechanisms.
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