Russia’s housing construction sector is facing a potential crisis, with projections indicating a possible halt or significant decrease in building by 2027. This alarming forecast stems from a slowdown in new project launches, as highlighted by Deputy Prime Minister Marat Khusnullin.

The primary concern is the cessation of new construction projects, which Khusnullin warns could lead to a situation where housing construction either ceases entirely or diminishes substantially by 2027. He voiced these concerns in an interview with Russia 24 TV channel.

If the current trend persists, the reduction in housing construction could reach as high as 30%.

Several factors contribute to this potential downturn. Developers are reportedly suspending projects due to insufficient funds in escrow accounts, a consequence of reduced mortgage lending. This financial strain could also delay the completion of already planned projects, pushing their commissioning to 2026.

High interest rates set by the Central Bank, while aimed at curbing inflation, pose a significant threat to the construction industry. Khusnullin acknowledged the necessity of these rates but emphasized the risks they create for the sector.

Stopping projects already underway could have lasting negative repercussions, and Khusnullin stressed that rebuilding the industry would require considerable effort. He highlighted the importance of maintaining the momentum built over the past five years, involving governors, contractors, and development institutions.

Despite these challenges, there are some hopes for mitigation. Khusnullin expressed optimism that the elimination of mortgage commissions could stimulate lending and alleviate the crisis.

Earlier statements from Khusnullin indicated plans to maintain a construction rate of at least 100 million square meters per year until 2030. The goal was to ensure that by 2030, one in five square meters in the country would be new, increasing housing provision to 33 square meters per person.