Russia economy meltdown as property market collapses

Russia's economy is facing fresh turmoil as its once-buoyant property market plunges into crisis, with sales of new apartments collapsing by nearly 39% over the past year, according to new government data. From July 2024 to June 2025, just 458,727 apartments were sold across the country, representing a staggering 38.7% drop in the number of transactions compared to the previous 12 months.

The total area of property sold fell by 37.2%, down to 21.9 million square metres, according to a report by the state-owned housing firm Dom.RF. The figures are echoed by real estate platform Cian, which recorded a 39% decline in property deals year-on-year, down to 477,000 units.

The dramatic decline has been linked to the abolition of Russia's preferential mortgage program on July 1, 2024.

The scheme, originally launched in 2020 to stimulate homeownership during the COVID-19 pandemic, had offered government-subsidised mortgage rates and fueled a construction boom.

The blow was compounded by a surge in interest rates as Russia's central bank responded to mounting inflation and a weakening ruble.

The key interest rate now stands between 18% and 21%, pushing average mortgage rates to 19-30%, according to developers. These sky-high borrowing costs have made home loans virtually unaffordable for the average Russian household.

Figures from Dom.RF also show a 27% year-on-year drop in new construction equity agreements over the last six months, reflecting the ongoing stagnation in the real estate sector.

Industry experts warn the collapse of the property market could have a ripple effect across the Russian economy.

The construction sector is a major employer and growth engine, and declining investment in housing threatens to deepen Russia's economic malaise amid Western sanctions, capital flight, and inflationary pressures.

The outlook for recovery remains bleak, with analysts predicting further declines unless state support is reintroduced or borrowing conditions ease.