Housing prices in Azerbaijan continue to rise, extending a trend that began amid the Russia–Ukraine war and has not reversed in 2025.
In Baku, apartments have not become more affordable, keeping homeownership out of reach for many families and pushing demand toward the rental market.
So what lies ahead in 2026? Will housing become more accessible, or is the market settling into a new high-price reality?
According to an annual review by Azerbaijan’s Chamber of Appraisers, the real estate sector has entered a phase of measured and rational growth, moving away from emotional price spikes toward a more structured and mature trajectory.
A Market Growing Without Overheating
In 2025, housing prices increased by an average of 14-16% nationwide. Growth was estimated at 13-15% in the primary market and 14-17% in the secondary market. While prices have risen by nearly 45-47% since 2020, the pace of growth has clearly slowed.
Experts say this signals a transition to a balanced market—neither overheated nor stagnant – driven by real supply and demand rather than speculation.
Baku Sees Selective Price Growth
One of the defining features of the market in 2025 was location-based pricing. Central and prestigious areas of Baku continued to see price increases, while growth in peripheral districts was noticeably weaker.
Abşeron and Sumgayit functioned as natural extensions of the capital’s housing market, with prices rising 8-11%, largely supported by demand in the mid-range segment.
Rental Market Outpaces Home Sales
The rental sector proved more dynamic than home sales in 2025. Rental prices rose by 13-15%, with average monthly rents in Baku reaching 850-900 manats.
This growth was fueled by limited access to mortgages, ongoing migration toward the capital, and increased activity in education and service sectors. Analysts note that rental growth remains steady rather than explosive.
Mortgages Remain a Constraint
The mortgage market failed to fully recover in 2025. While state-backed lending provided some support, higher bank interest rates narrowed the pool of eligible buyers.
Ironically, this constraint helped prevent artificial price inflation, contributing to a healthier – if slower – market.
Key Risks in 2026
Looking ahead, experts highlight several risks for 2026:
housing prices continuing to outpace household incomes;
restricted access to long-term financing;
growing inventories of unsold apartments;
inflation and macroeconomic uncertainty;
regional imbalances in development;
complex legal and administrative procedures.
A decline in transaction volumes could cool the market if these pressures intensify.
How Risks Can Be Reduced
To stabilize the market, analysts emphasize the importance of transparency and policy coordination. Recommended measures include:
expanding mortgage instruments and low-risk financing options;
developing affordable and social housing projects;
aligning construction volumes with real income levels;
simplifying property registration and permitting procedures;
investing in regional infrastructure to reduce pressure on Baku.
Bottom Line
Azerbaijan’s housing market enters 2026 without illusions but also without panic. Prices are unlikely to fall sharply, yet major shocks are not expected either. Homeownership remains challenging, while renting continues to be the primary alternative for many households.
The central question is how quickly the market can realign with the purchasing power of the population.
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