By Yaroslav Lissovolik
After more than 20 years since the launching of the BRICS concept, myriads of potential modalities of cooperation have been explored within the group, ranging from humanitarian to financial cooperation. Despite all the advances, there is one sector that did not receive nearly as much attention and development as needed in terms of intra-BRICS+ cooperation – in our view this is residential housing construction and in what follows we present a range of reasons why boosting BRICS development in this sphere is so critical. We highlight such factors as the role of the sector in the environmental outlook, its importance for lowering social inequality, as well as its criticality for the expansion in the ranks of the BRICS middle class. We then proceed to outline some of the possible policy initiatives that may be undertaken by BRICS to advance greater sustainability and affordability in residential housing.
One reason why housing is so important for BRICS is that improving living conditions and having a home or a house is one of the main goals for most of the households across the core BRICS economies. According to VCIOM polling agency, in 2024 more than 50% of Russians declared that they needed to improve their housing conditions. At the same time, as of mid-2025 only 17% of respondents in Russia were planning to improve their housing conditions – this share has come down compared to 2024 when it stood at 31%. The main reason for the decline in the share of those that are planning to invest into improving their housing conditions is the rise in expectations of higher housing prices – the corresponding share of respondents with such expectations exceeded 50% in 2025. A similar picture is observed in other BRICS economies – in India more than half (53%) of the respondents support the construction of more affordable housing to meet demand.
These figures suggest that a fundamental challenge faced by some of the largest BRICS economies may have to do with a lack of supply in affordable housing, which in turn sustains housing prices at elevated levels. As a result, as most BRICS economies attempt to surmount the middle-income trap, one of the barriers becomes what may be termed as a housing middle-class trap, whereby the rise in housing prices due to limited supply undermines the formation of the middle class due to the lower housing affordability. A related trap for the middle class arises when the high cost of housing in neighborhoods with good schools has to be borne by the family to afford high-quality education for the children. Such phenomena appear to be in motion currently in BRICS economies such as India, where the gap between high demand for housing and limited supply has driven up housing prices, leading households to opt for renting apartments.
Bridging the “housing gap” across the developing world may prove critical for boosting middle class growth. The widening of the ranks of the middle class in turn is one of the key long-term growth drivers for some of the largest BRICS economies, most notably China and India. China has the largest pool of middle class consumers in the world (estimated at more than 0.5 bn consumers) and it is also the source of the largest growth in the number of middle class consumers in the world. India may catch up quickly in case it does effectively address its housing gaps, and together with China it could further strengthen the role of emerging economies in the expansion of the global middle class and the contribution of the developing world to global consumption growth.
More generally, the main reserve and the greatest potential harbored by BRICS+ (BRICS core members and partnership members) is the human capital of the population of the bloc’s economies that accounts for more than 50% of the world’s total (China and India taken together account for more than a third of the world’s population)). The BRICS+ also account for a rising share of global population growth due to the accession of African economies into the bloc – World Bank figures suggest that while the annual percentage growth in 2024 amounted to around 1% globally, the corresponding figure for the Euro area was 0.2% and for OECD economies 0.6%, whereas in Ethiopia it is 2.6%, for Egypt it reaches 1.7%, for South Africa it stands at 1.2%, for Uganda (partner country) it amounts to 2.8%). In light of these figures, affordable housing becomes the key gateway to raising global welfare as well as the BRICS+ ability to disenthrall the BRICS+ human capital potential.
Another important human capital dimension to the role of the housing sector for BRICS is the dominant and rising share of the Global South in the global youth population. According to the World Health Organization (WHO), the average (median) age in such BRICS members as India and Ethiopia is 29 and 19 respectively, in Uganda (BRICS partner) it is 16.9 years, in Egypt (core member) it is 24.5 years compared to the global average of more than 30 years (more than 45 years in Germany and more than 48 years in Italy). With the BRICS+ harboring not only the majority of the world’s population, but also a significant part of its younger generation, affordable housing becomes all the more important for the BRICS+ platform, given the criticality of affordable housing for young families.
Other factors accounting for the importance of the affordable housing sector for BRICS include the following:
- Lowering social inequality: some of the BRICS economies such as Brazil and South Africa exhibit some of the highest levels of income/wealth inequality as well as regional inequality in the world. The Gini index, a measure of the degree of income inequality, in Brazil reaches 51.6 and in South Africa it reaches 63 – compared to 41.8 in the US or 32.4 in Germany. Existing research points to the positive effects of social housing provision for attenuating economic disparities and promoting greater social integration; at the same time, escalating housing costs and a shortage of affordable housing mostly affect low-income households, resulting in disparities in wealth accumulation and opportunities across generations.
- Greater labor mobility – given the large territorial expanses of BRICS economies and the presence of large swathes of landlocked inland territories labor migration and labor mobility may be constrained without high levels of development of the transportation sector and the housing market. Labor mobility in turn is crucial for higher productivity growth, with low labor mobility in countries such as Russia and India depriving them of the benefits of improved resource allocation and efficiency gains.
- Housing is critical for the environment – globally housing construction has the highest carbon footprint across sectors; according to the World Green Building Council, “buildings are responsible for 39% of global energy related carbon emissions: 28% from operational emissions, from energy needed to heat, cool and power them, and the remaining 11% from materials and construction”. With emissions from housing construction across BRICS economies being sizeable on a global scale (China is the largest emitter in this sector), sustainable housing construction across the Global South may deliver a crucial contribution to achieving the SDGs and the environmental targets as set forth in countries’ commitments in the UN and COP.
- Development of capital markets and the importance of long-term financial flows – mortgages and bond issuance by housing construction companies represent important sources of long-term financial flows. For BRICS economies, the lack of depth and diversification in capital markets as well as the scarcity of long-term financial flows increase volatility and reduce the sustainability of economic growth. As stated in the research of the Asian Development Bank, “there is a symbiotic relationship between housing finance markets and wider capital markets, according to current evidence. The expansion of housing finance is assisted by the development of capital markets, and the growth of capital markets assists the expansion of housing finance. The development of both contributes to overall growth of the economy”. Overall, the advancement of deep capital markets and well-developed housing finance markets contributes to the resilience of the banking sector as well as its connectivity with the real sector of construction companies.
To be continued in part 2.
Yaroslav Lissovolik, Founder, BRICS+ Analytics
