AZE.US
Buying an apartment in Baku is becoming less of a normal life goal and more of an unrealistic dream for many families, as housing prices continue to rise faster than incomes.
The pressure is especially visible in new residential buildings, where prices have climbed sharply in recent years. Buyers say they check listings regularly but struggle to find anything that matches their budgets. For young families, the gap is even harder to close. A monthly salary of 500-600 manats leaves little room for mortgage payments, utilities, repairs and everyday expenses.
Official data confirms the trend. According to Azerbaijan’s State Statistics Committee, housing prices rose by an average of 8.1% in the first quarter of 2026 compared with the same period last year. The strongest increase was recorded in new buildings, where prices rose by 13.1%. Prices in older buildings were also up 8.1%. Compared with the final quarter of last year, the overall market rose by 2.2%.
Experts say the increase is being driven by several factors at once. One of the main reasons is the rising cost of construction. Developers are increasingly working on sites where old, unsafe apartment blocks or private homes are demolished. In such cases, companies must provide replacement apartments, cover relocation costs and pay rent compensation to affected residents. Those costs are then reflected in the final price of new homes.
Another major factor is limited supply. In Baku and other large cities, available land for construction is shrinking, while the number of new projects has slowed. Experts say the number of construction permits has fallen sharply since 2021 and is now several times lower than in 2016.
That gives developers more pricing power. Fewer new apartments are entering the market, competition remains limited and demand has not disappeared. As a result, prices are rising not only because of real costs, but also because of market expectations. Many buyers fear that if they do not purchase now, the same apartment may cost more in a few months.
Investment demand is also heating up the market. New apartments in Baku are increasingly treated not only as housing, but as a way to protect capital. Investors often buy units at early construction stages and later resell them at higher prices. That makes the market more expensive for families who are trying to buy a home to live in, not to trade.
Mortgage programs also have a mixed effect. Preferential loans help some buyers enter the market, but they also increase demand in a market where supply is already tight. That support may help transactions continue, but it can also push prices higher.
Real estate and construction expert Elnur Azadov said earlier forecasts about price growth have largely proved accurate. He said Baku’s housing stock has risen by around 10-12% annually in recent years, while in 2022 and 2023 some segments saw increases of 15-18%.
According to Azadov, price growth is likely to continue in 2026 not only in the housing market, but also in land and commercial property. The trend may continue into 2027, at least through the first half of the year, and possibly longer. Stabilization would become more likely only if more new projects enter the market and competition among developers increases.
For now, the market remains defined by a simple imbalance: too few apartments, steady demand and buyers whose incomes are not keeping pace with prices. Construction costs are rising, land is scarce and developers have little incentive to lower prices.
For many families in Baku, the question is no longer which district or floor plan to choose. It is whether buying a home is possible at all without taking on a financial burden that could last for years.
AZE.US