New Construction Market Continues to Decline as Demand Shifts to Resale Properties

Russia's housing market is experiencing a trend reversal: demand for ready-to-move-in housing is growing. This situation arises when the Central Bank's key rate remains high while expectations for new construction prices prove unrealistic. We've seen this before in 2009–2010, after 2015–2017, and especially in late 2022. Today history is repeating itself, and the statistics bear this out.

Why demand is shifting from new construction to resale housing

According to Rosreestr data, in April 2026 Moscow's new construction market saw 4,100 equity participation agreements signed — down 39% from a year earlier (6,600). Meanwhile, the ready-to-move-in housing market registered 13,500 transactions — 18% more than in April 2025. According to DOM.RF, in Q1 2026 the share of mortgages for ready-to-move-in housing rose from 41% to 56%, while lending for such properties increased 2.2 times year-over-year versus just 21% for under-construction properties. Ready-to-move-in apartments made the biggest contribution: their share of mortgage originations jumped from 34% to 48%. This is a direct consequence of the recovery in market-rate mortgages: falling rates primarily stimulate demand where subsidized programs don't apply — namely, in the resale market.

Here the resale market has a traditional advantage over new construction — many transactions involve trade-in arrangements with additional payments for sold housing. In other words, buyers already have the bulk of the funds needed for their next purchase, rather than just a minimal down payment as in mortgage transactions for new construction. This shift to resale housing has accelerated also because cheap, poor-quality units are being methodically flushed out of the market — apartments in Soviet-era Khrushchevkas and Brezhnevkas. In their place remain improved offerings, including so-called "fresh resale" — housing from recently completed new construction that's already ready for occupancy. These are properties that investor-buyers couldn't sell during construction and are now listing after building completion. Such properties combine the legal clarity of new construction with immediate move-in readiness, making them especially attractive to buyers.

Against this backdrop, the primary market is losing buyers. According to Rosreestr, in Moscow from January through April 2026 17,100 equity participation agreements were registered — 37% fewer than a year earlier. In April, demand for primary housing in cities with populations over one million fell by 21–27% year-on-year, in Moscow by 37% at once, and in Volgograd the decline approached 50%. Overall, by early 2026, demand for new construction fell 42% compared to the second half of 2025, while for secondary housing it dropped only 2.2%, noted CIAN.

This trend is confirmed by the convergence of prices: if at the beginning of 2026 new construction was more expensive than secondary housing by an average of 26% nationwide, by May the gap narrowed to 23%—the fifth consecutive month. In Moscow it remains high (44%, down from 48%), but is also falling. In regions with large old housing stock the premium is higher (for example, in Barnaul it's 61%), while in Krasnodar or Kazan it's only 18% (CIAN estimate). Meanwhile, prices for new construction in cities with populations over one million on average rose by 12.3%, and in Moscow and St. Petersburg by 24% per square meter. "Business-class" and especially premium-segment properties in the capital have doubled in price over three years. This is pulling up prices in the secondary market, where buyers are shifting. Mass-market housing there is also rising rapidly: according to Miel, in April 2026 the average transaction price for a one-bedroom apartment on Moscow's secondary market reached 14.3 million rubles (compared to 11.3 million rubles a year earlier). The market has already arrived at a new standard: a "normal" one-bedroom costs from 15 million, a two-bedroom from 20 million, a three-bedroom from 30 million rubles.

The key reason for this imbalance is the phasing out of subsidized mortgages. Without government support, new construction loses its main competitive premium. Under market conditions, the premium for newness cannot exceed 9–15%, and that's only for buildings in the final stages of construction. Projects at the foundation-pit stage, by contrast, should sell at a 10–20% discount to account for risk and waiting time.

The overvalued new construction market cannot exist without mortgage stimulus. According to Ricci data for 2016–2025, prices for new construction in Moscow (within the MKAD ring road) increased by 185%—from 183,000 rubles to 520,000 rubles per square meter. That's nearly 2.2 times higher than Russia's cumulative inflation over the same period (84%), indicating that new construction is becoming more expensive faster than household incomes and overall inflation are rising, making housing increasingly unaffordable. Meanwhile, the average lot size in transactions has shrunk by 15% (from 60 sq m to 51 sq m), which partially restrains the growth in purchase budgets. But even accounting for this, the total transaction amount has grown by 143% (from 11 million rubles to 27 million rubles). This means that price increases per square meter are being offset by reduced floor space, but it doesn't solve the affordability problem: buyers are forced to choose more compact housing to stay within budget.

Developers are building more than they're selling

Against this backdrop, developers continue launching projects faster than they can sell them. According to DOM.RF, in Q1 2026 they began construction on 10.7 million sq m of housing—a 39% year-over-year increase and a record high since tracking began. The pipeline of housing under construction has grown to 118.9 million sq m, but sales have increased by only 12% by area and 16% by value. In other words, for every apartment sold, there are 1.67 new units started—the excess of launches over sales has reached 67% (the critical threshold is 70). To somehow move inventory, developers are quietly cutting prices, or more precisely, not raising them above the rate of inflation. According to CIAN, actual discounts in the Moscow region over the first four months of 2026 increased to 6% (versus 4.8% a year earlier). Discounts have grown especially sharply in the mass-market segment: in the economy class, the gap between listed and actual prices reached 5.4%, in the comfort class—6.2%, and in the business and premium classes—6.7–6.8%. This is a clear signal that sales are falling in projects with inflated prices.

Demand is further constrained by declining mortgage affordability: its share of transactions since the beginning of 2026 has fallen to 64% (down 17 percentage points year-over-year). The family mortgage program has been tightened. Now it can only be used once per family, and installment plans, which previously covered up to 40% of transactions, now account for just 25–30% and have come under regulation: since April 2026, they're reported to credit bureaus, and developers have abandoned minimal down payments due to risks. Family mortgages for unmarried parents may become more expensive as early as July 1. The Ministry of Finance proposes raise the rate in two cases: if the second parent attempts to take out a separate loan or if the borrower is unmarried and not registered at the same address as the child. These measures will supplement the February tightening based on the "one family—one loan" principle.

Another important innovation is being prepared for mid-summer: a ban on purchasing apartments smaller than 30–34 square meters under the family mortgage program. The official logic is that this program was created to address demographic problems, and one-bedroom apartments don't serve that purpose. But the reality is different. People buy small apartments not because they want to, but because they have to. Prices continue to rise: according to Metrium, in the Moscow region they increased by 16% year-on-year (to 229 thousand rubles per square meter), in Moscow— by 20% (to 418 thousand rubles per square meter). Meanwhile, the share of one-bedroom apartments in new projects reached 58% nationwide, and in certain cities became even higher: 73% in Leningrad Oblast, 72% in St. Petersburg, 68% in Krasnodar Krai.

The problem lies not in demand, but in its mismatch with supply. For example, in Krasnodar Krai, where more 60% of housing under construction consists of studios and one-bedroom apartments, while project sell-through rates by completion have fallen: in May it reached just 66% versus an average of 76% across the top 10 regions. This means developers are building properties unsuitable either for family living or for investment. And now the government is trying to halt this process not through price reductions, but through new restrictions. The consequences can be seen in sales momentum. In Q1 2026, only 27% of developers met or exceeded their sales targets—the lowest figure in two years and 60 percentage points below Q4 2025 (when it was 87%). This is reported in a joint study by DOM.RF, VTsIOM, and the Construction Industry Development Institute (IRSO).

The situation with new project launches has also deteriorated: 57% of developers met their targets (+7 p.p. from the previous quarter). Meanwhile, 9 out of 10 companies kept pace with ongoing construction plans, with only one in ten builders missing deadlines. This confirms the issue isn't the ability to build, but the ability to sell. Developers are trying to stimulate demand through promotions and discounts, but these are merely stopgap measures.

A market trapped in short-term fixes

The new-build market has found itself in a vicious cycle: developers continue building according to old playbooks, oriented toward the bygone conditions of subsidized mortgages, while buyers increasingly opt for ready-made housing. Previously, subsidized mortgages came to the rescue, creating an illusion of affordability and sustaining demand through volatile spikes driven by fear of missing out on state support. Developers, in turn, rushed to launch expensive projects while the "subsidy window" remained open. Now this reserve is running dry: the budget is optimizing expenditures, and any substantial reduction in the key rate remains distant. As a result, companies can't sell at higher prices but can't build more cheaply either, while last year's reserves have been consumed by high project financing rates (15–20%). Today many are working not for profit but for survival, essentially servicing bank loans rather than developing their businesses. Under these conditions, there won't be a mass price collapse: it's only possible selectively—in completed buildings or at final sales stages, as "fire sale" measures.

Tightening conditions for family mortgages and reduced credit availability are exacerbating the crisis, while authorities' attempts to restrict purchases of compact apartments don't address root problems. If developers' strategies don't change and authorities continue managing demand through programs instead of resolving systemic issues, the market will remain in an unstable state where new builds lose ground and housing affordability for families diminishes. Buyers traditionally expect a crash, but the secondary market is also stagnating without across-the-board price reductions—there are currently few transactions there too, with moderate saturation of "fresh resales."

In the coming months, while the key rate remains in the 14–15% range, demand will concentrate on the secondary market based on a simple principle: "whatever we can afford." However, once the Central Bank establishes lower rates, developers may launch their own mortgage programs at 10–13%, and authorities may again discuss increasing family mortgage limits (to 18 million rubles in Moscow and St. Petersburg, to 9 million rubles in the regions). Then demand for new builds will increase, pulling prices up again. But until that happens, the market—tired of inflated prices and cramped "cubicles"—is shifting its interest to ready-made housing, the only accessible option in this situation. An alternative scenario could involve not falling prices but improved construction efficiency and cost growth no higher than inflation. We're still far from that.