Plummeting real estate sales have marked the latest blow to Russia’s economy amid ongoing sanctions and loss of trade linked to the Ukraine war. The number of unsold homes in Vladimir Putin’s country is reportedly on the rise in a trend that could leave developers bankrupt and spark further economic chaos for the already-struggling nation.
Russian daily newspaper Izvestia reported: “Due to the end of preferential mortgages in the [Russian] regions, the portion of unsold housing is rising. This could lead to developers going bankrupt. Sales of residential real estate plummeted 40% in April.” The country’s economy – which is largely reliant on oil and gas exports – has significantly suffered under heavy sanctions from the West since the Ukraine invasion in 2022. The crisis has also hit consumer pockets, with rising food prices linked to a decline in car purchases – and repercussions also apparently being felt in Russia’s housing sector.
The residential housing sector is just one area of Russia’s economy currently in decline, according to the Nezavisimaya Gazeta, as the “painful” fallout from a drop in oil prices continues.
“On Tuesday, Vice Premier Novak announced that the Russian economy is displaying stability and active growth in difficult geopolitical conditions,” the news outlet said.
“However, several sectors of the Russian economy are showing a highly negative dynamic. The fall in mineral extraction continues, there’s a drop in the residential housing construction sector, the sale and production of cars are down [and problems in the coal industry are growing.”
The paper reported sales of Russian agricultural equipment being also down by 30% – painting an increasingly dire picture at home, even as Putin’s troops continue to bombard Ukraine with drones and missiles.
Despite officials repeatedly pushing messages of growth, experts have warned that it mainly rests on the war effort, which has in turn been used to mask an economy in decline.
Alongside an energy crisis, Russia has been forced to contend with spiralling military costs as Putin’s campaign in Eastern Europe continues to ramp up.
Adina Revol, former spokesperson for the European Commission, told BFM Business: “The Russian economy depends more than ever on the war effort and its fossil fuel revenues.”
“An economy transformed into a war economy does not produce real wealth,” she warned. “The indicators are in the red.”
