AZE.US
Azerbaijan added more than 4.6 million square meters of residential space in 2025, but homeownership remains beyond the reach of many families as high prices and expensive borrowing continue to constrain demand.
The situation could become more difficult as construction activity slows. Azerbaijan’s construction sector contracted by 9.4% in the first half of 2026, raising concerns that a weaker supply of new housing could add further pressure to the market.
Economist Vahid Ahmadov told Globalinfo.az that demand for housing remains high despite extensive construction by the government and private developers.
According to Ahmadov, opportunities for new projects in major cities have become increasingly limited. Construction in the regions has also failed to keep pace because relatively few developers operate outside the largest urban centers and private-sector activity remains weak.
Baku is continuing to redevelop several districts under the capital’s master plan, replacing aging buildings with modern residential complexes. However, adding new apartments has not necessarily made them affordable for households with average incomes.
Ahmadov identified high interest rates as one of the market’s main obstacles. Costly loans make it harder for residents to obtain mortgages and create financing problems for developers. A growing volume of overdue debt is also affecting the broader credit market and delaying some construction projects.
Internal migration is adding to the pressure. A shortage of jobs and adequate housing in the regions encourages residents to move to Baku and other major cities, where demand is already concentrated.
Ahmadov said the government should place greater emphasis on regional development by supporting new housing projects and creating more jobs outside the capital. This could improve living conditions in the regions while easing population and housing pressures in Baku.
He also called for the removal of administrative and legal barriers affecting construction. Amendments to the Housing Code may be needed to prevent local authorities from imposing additional restrictions on projects that meet national legal requirements, he said.
The figures highlight a growing housing paradox in Azerbaijan: millions of square meters of residential property are being built, yet high prices, expensive credit and uneven regional development continue to push homeownership further out of reach.
AZE.US