Baku’s real estate market is facing several challenges. Over the past three to four years, the pace of new housing construction has been relatively slow, while apartment prices have surged sharply. In 2024–2025, borrowing through the Azerbaijan Mortgage and Credit Guarantee Fund (AMCGF) also declined.

According to the Central Bank of Azerbaijan’s (CBA) recently published semi-annual Financial Stability Report, housing prices in both the primary and secondary markets have risen by 46% over the past five years. Moreover, the CBA estimates that in the first half of this year, the growth in housing prices has outstripped the increase in household incomes by a factor of two.

The construction industry, which was highly profitable in the past, has faced strain in the post-pandemic period due to several factors that have increased construction costs and reduced the volume of housing built in the capital and regions. A key role here was played by imported inflation, which drove up the prices of building materials and construction machinery. At the same time, domestic expenses for fuel, transport, contracting, and design services increased, along with labour costs. In the previous three to four years, the price dynamics were further accelerated by the rapid rise in the cost of land suitable for construction in Baku, Sumgayit, the Absheron Peninsula, and some other urbanised regions of the country.