Salaries rise 7% while house prices climb 12.4%: Is it worth buying home in Azerbaijan?
Buying a home in Azerbaijan
The average price of a 65-square-metre flat in Baku is now around 178,000 manats (about $105,000). Someone earning the country’s average monthly salary of 1,174 manats (about $690) would have to save their entire income for 12 and a half years to afford it. But once the cost of food, rent, transport and other everyday expenses is taken into account, this calculation is purely theoretical.
According to an August review by the Central Bank, house prices rose by 8.6% year-on-year in the second quarter of 2026. Prices for newly built homes increased by 12.4%, while those on the secondary market rose by 8.6%. Rents increased by 7.4%. Over the same period, average nominal wages rose by 7%.
Wage growth is failing to keep pace with house prices
In Azerbaijan, the average nominal wage rose by 7% over the year, or about 77 manats (around $45), reaching 1,174.4 manats. At the same time, prices for newly built homes increased by 12.4%. This means new homes became 5.4 percentage points more expensive than the rate at which average wages increased.
The gap shows that housing affordability for potential buyers has not improved. The rise in wages increased a worker’s annual pre-tax income by around 920 manats (about $541). Meanwhile, a 12.4% increase in house prices means that a flat costing 170,000–180,000 manats would have become roughly 19,000–20,000 manats (about $11,200–11,700) more expensive over the year.
It should also be noted that 1,174 manats is the average nominal wage across the economy as a whole. The figure is calculated before taxes and social contributions and does not reflect the actual income of most workers.
How many years would it take to buy a 65-square-metre flat?
The m2map platform, which analysed more than 82,000 active listings in August, estimated the median asking price in Baku at 2,735 manats (about $1,609) per square metre. At that price, a 65-square-metre flat would cost 177,775 manats.
According to July data from the Azerbaijan Chamber of Appraisers, the median price per square metre for newly built homes was 2,812.5 manats (about $1,655), compared with 2,616.7 manats (about $1,540) on the secondary market. This puts the price of a flat of this size at roughly 170,000 to 183,000 manats (about $100,000–108,000), depending on the segment.
At the national average monthly wage of 1,174.4 manats, 177,775 manats is slightly more than 12 and a half years of a worker’s total earnings. Using Baku’s average wage of 1,487 manats (about $875), the period falls to around 10 years. But this is only a theoretical calculation, assuming a person spends none of their salary on anything else. In reality, someone on an average income would need considerably longer to save the full price of a flat.
If a buyer can save 20% of their salary, it would take around 50 years to accumulate the full cost of the property. To save the down payment required under a standard mortgage, which in this case would be around 28,000 manats (about $16,500), would take almost eight years.
The average wage also does not reflect the incomes of all workers. According to data from the State Statistics Committee, during the first five months of the year, average monthly wages were 763 manats (about $449) in retail, 825 manats (about $485) in education, and 800 manats (about $470.50) in tourism and catering. For workers in these sectors, a mid-range flat in Baku is equivalent to around 18–19 years of their combined earnings.
Does a mortgage make housing more affordable – or more expensive?
The maximum amount available under a standard mortgage from the Mortgage and Credit Guarantee Fund is 150,000 manats (about $88,235), with a loan term of up to 25 years, an annual interest rate of 8% and a minimum down payment of 15%. However, 85% of the 177,775-manat price of the flat exceeds the loan limit, meaning the buyer would have to provide at least 27,775 manats from their own funds.
If the remaining 150,000 manats were borrowed for 25 years at 8% interest, the monthly payment would be around 1,158 manats (about $681.20). Over the full term, the borrower would repay more than 347,000 manats (about $204,000) to the bank. Including the down payment, the total cost would exceed 375,000 manats (about $220,600). Insurance, property valuation, notary fees and other associated costs are not included.
A monthly payment of 1,158 manats is almost equal to the average salary across the country and represents 78% of the average salary in Baku. Under the Fund’s rules, mortgage payments must not exceed 70% of borrowers’ combined income after tax. This means that a Baku resident earning a single average salary would find it practically impossible to service such a mortgage alone.
In a household where two people earn the average Baku salary, the monthly mortgage payment would account for 39% of their combined nominal income. After tax, the share would exceed 40%. According to OECD and Eurostat methodology, housing costs exceeding 40% of disposable income are considered an excessive housing burden.
Under the subsidised mortgage scheme, the annual interest rate is 4%, the loan term can be up to 30 years, and the maximum loan amount is 100,000 manats (about $58,820). Although the monthly payment would be around 477 manats (about $280.60), buying a 65-square-metre flat at Baku’s average price would require around 78,000 manats (about $45,882) in the buyer’s own funds. The lower interest rate therefore does not solve the main problem for families without substantial savings.
Is renting cheaper?
The median advertised rent in Baku is 11 manats (about $6.50) per square metre per month. Renting a 65-square-metre flat would therefore cost around 715 manats (about $420.60) a month – 443 manats (about $260.60) less than the monthly payment on a standard mortgage. However, this still amounts to around 48% of the average salary in Baku, excluding utility bills.
If an investor bought such a flat for 178,000 manats and rented it out for 715 manats a month, the gross annual rental yield would be around 4.8%. After accounting for maintenance, periods when the property is vacant and other associated costs, the actual return would be even lower. Buying a flat with a mortgage and then renting it out therefore generally does not allow the owner to cover the full cost through rental income alone. The model may make sense primarily for investors with substantial capital who are betting on further increases in property prices.
What is driving prices higher?
The Chamber of Appraisers attributes the rise in new-build prices to strong demand in the mid-to-upper and premium segments, the availability of mortgage financing and the perception of housing as an investment asset. The Chamber’s land price index also points to rising prices and limited supply in premium areas. This may put additional pressure on the cost of newly built homes.
At the same time, according to the State Statistics Committee, investment in residential construction fell by 2.7% in real terms in the first half of the year. These figures strengthen the suggestion that demand, growing faster than household incomes, is running up against limited supply.
State-backed mortgages make housing more affordable for some families: in the first half of the year, 2,242 families received mortgage loans worth a total of 226.3 million manats (about $133.1 million). Since 2019, just over 10,000 families have used the rent-to-own scheme. However, it remains unclear whether these programmes are large enough to curb the overall rise in property prices.
Buying a home in Baku today is therefore more affordable for a household with two stable official incomes, substantial savings for a down payment or another property that can be sold than for someone living on a single average salary. Those who qualify for subsidised mortgages and have tens of thousands of manats in savings are also in a stronger position.
For everyone else, the choice is essentially between increasingly expensive rent and taking on long-term, substantial debt.
Buying a home in Azerbaijan
