AZE.US
Rent in Azerbaijan has crossed a new psychological threshold, underscoring the growing gap between housing costs and household incomes.
According to the Central Bank of Azerbaijan, the country’s median monthly rent stood at 1,002 manats at the end of December, reflecting continued pressure in the housing market as property prices keep rising faster than many families’ purchasing power.
The data was published in the regulator’s Financial Stability Report covering the end of 2025.
The Central Bank said the capitalization period in the housing market reached 20.9 years, up by 1.4 years compared with 2024. In practical terms, that means home prices increased faster than rental rates over the past year, pushing the market further away from what many households can realistically afford.
Housing prices still posted strong annual growth, even though the pace has begun to stabilize. Overall housing prices rose 12.2% over the year. Prices in the primary market increased 12.7%, while the secondary market recorded growth of 12.2%. The regulator noted that growth remained steady in the primary segment, while the pace of increase in the secondary market showed some moderation.
Akif Nasirli, head of the Liberal Economists Center, told Bizim.Media that rent moving above 1,000 manats is largely a result of the broader rise in real estate prices rather than a standalone jump in the rental segment.
He said one of the main drivers is the imbalance between supply and demand, especially in major cities and above all in Baku. Population growth, migration from the regions to the capital, and rising demand for rental housing have all added pressure, while supply has not expanded at the same pace. New residential projects have done little to fully ease the strain, as many are concentrated in the high-price segment or are built for sale rather than for rent.
Nasirli also pointed to rising construction costs. Higher prices for building materials, labor, and land have increased the cost of new housing, feeding through into both sale prices and rents.
Mortgage trends are also adding pressure to the rental market. While mortgage lending continued to expand in 2025, standard bank-funded mortgages became more expensive. The average interest rate on mortgages issued from banks’ internal resources rose by 1.17 percentage points to 11.92%, a shift that has made home purchases harder for some borrowers and kept more people in the rental market.
By contrast, the interest rate on loans issued through the Azerbaijan Mortgage and Credit Guarantee Fund fell by 0.49 percentage points to 5.96%. But that easing has not been enough to significantly reduce demand for rental housing.
The Central Bank said the outstanding volume of mortgages issued from banks’ internal resources increased by 104 million manats, or 5.4%, over the year. Loans issued through the state-backed fund rose by 253 million manats, or 10.8%.
A broader affordability problem remains in place. Official statistics show that in 2025 housing prices rose 12.2%, while disposable incomes increased by only 7.6%. Although the gap narrowed gradually over the year, largely because the pace of housing price growth slowed, the market is still moving ahead faster than incomes.
The Central Bank said household income dynamics still allow for sustainable mortgage lending, and the country’s affordability index remains above the 100% benchmark commonly used in international practice. That suggests average disposable income is still sufficient to cover monthly mortgage payments on new loans.
For renters, however, that offers limited comfort. As long as apartment prices keep rising, construction remains costly, and demand in Baku and other large cities stays high, pressure on the rental market is unlikely to ease.
The 1,002-manat median rent figure makes one point clear: in Azerbaijan, renting is becoming less of a temporary choice and more of an expensive necessity.
AZE.US