Aze.US
Housing prices in Azerbaijan are expected to continue rising in 2026, although at a slower pace than in previous years, according to projections by S&P Global Ratings and local market analysts.
Inflation-adjusted residential property prices are forecast to increase by around 5% to 6% this year.
That compares with a significantly stronger rise in 2025, when official statistics showed housing prices climbing 12.2% year on year, broadly in line with earlier estimates of 10% to 15% growth.
Slower momentum, not a downturn
Economists attribute the moderation in price growth to weaker lending activity, constrained economic expansion and expectations surrounding global oil prices. Even so, property continues to function as a primary investment vehicle for households, limiting the likelihood of price declines.
Analysts expect:
-
Older housing stock to rise by roughly 6% to 6.5%
-
Newly built apartments to increase by about 9% to 10%
Price growth is projected to persist into 2027, though at a further reduced rate.
Structural factors supporting prices
Market specialists note that Azerbaijan’s housing sector does not fully follow classical supply-and-demand dynamics.
Prices remain supported by several structural factors, including:
-
limited alternative investment opportunities
-
expectations of redevelopment and new residential complexes
-
demolition of older buildings and replacement with higher-value projects
-
fewer construction permits and reduced competition among developers
These constraints continue to restrict supply, sustaining upward pressure on prices even as buyer activity weakens.
Timeline for stabilization
A meaningful stabilization of the housing market is considered unlikely before late 2027 or 2028, depending on currency stability, broader economic conditions and the scale of new construction activity.
Analysts say only a return to large-scale building comparable to the 2016-2018 construction cycle could ease supply shortages and create conditions for price stabilization or limited declines.
Until then, residential property values in Azerbaijan are expected to continue rising gradually rather than reversing direction.