“Construction companies in Russia are facing a decrease in demand, suddenly reducing the volume of work and potentially being forced to resort to layoffs or even shut down their operations,” President Vladimir Putin declared during a State Council meeting.”The launch of new projects has decreased by 23% compared to the previous year. Real estate developers are accumulating debts, which threaten the stability of businesses – including the possibility of withdrawing from the market – and could lead to job losses in the sector, with negative effects on the entire economy,” Putin said.As part of national projects, Putin had previously called for the construction of 1.38 billion square meters of housing in Russia, of which 663 million will be completed by 2030. “However, given the current market and macroeconomic situation, there are risks of slowing down,” the President acknowledged. “At the national level, more than two thousand housing construction projects have already been postponed for up to six months. Developers are facing a decrease in demand.”The main blow to the construction sector was the cancellation of the reduced mortgage program and the increase of the Central Bank of Russia’s key rate to 21%. Banks have raised interest rates for mortgage loans to levels unseen since the 2000s – around 30% – and as a result, the amount of mortgage loans granted last year decreased by almost 40%, reaching the lowest level in the past 7 years in early 2025, according to Central Bank statistics.
