2024-02-22 02:28:55
The average monthly real estate inflation reaches almost 1 percent. At the same time, the purchase and sale of real estate decreased by more than 13 percent compared to the previous year.
The biggest decline was recorded in the housing market. In April, 38 percent less apartments were sold than last year, 17 percent less than last month.
The sale of apartments in Yerevan has decreased by more than 44 percent compared to last year.
Real estate agent Arayik Balabekyan said in a conversation with Aysor.am that it will be difficult to say in which administrative districts of Yerevan people want to buy an apartment more. “Each administrative district has its buyer.” Here it is important what the person is buying the real estate for: to live, to rent, or for business reasons. I can say that citizens prefer to buy apartments in newly built buildings.”
As for apartment prices, Balabekyan noted that there is no decrease. Compared to last year, buying and selling is less. There is a lack of buyers. The buyer wants real estate at prices that are not available on the market. After January, the demand for apartments decreased.
I should mention that the demand was intensified during the fluctuations of the dollar exchange rate and the Russian-Ukrainian war. People started buying apartments to rent out. At that time, apartments began to be sold at some absurd prices, which we did not agree with, but we could not do anything.”
Economist Suren Parsyan told Aysor.am that according to official statistics, in April of this year, compared to April of last year, the volume of real estate sales decreased by 30 percent, and in April, compared to March, by 17 percent. that in the market, due to the high inflation of real estate, the demand has decreased. Other factors also affected the demand, in particular, there are certain restrictions on the use of income tax, and in 2025, income tax refunds will generally cease in Yerevan. At the moment, it is stopped in Arabkir and Kentron, and in 2025 it will be stopped in all of Yerevan. Real estate sales were also affected by last year’s Russian-driven rental boom, with people looking at real estate as a way to make money; they bought and rented. Now the prices of those rents have also decreased, the demand for rented houses has decreased in the market. It also had a great impact on the market. In other words, we have a decrease in the demand for apartments in the market, which is caused by high prices and a reduction in the number of tenants.”
Parsyan added that the high prices of real estate in turn are caused by several circumstances, one of which is the increase in the prices of building materials. The Central Bank raised about it that there is 25 percent speculative inflation. In other words, the developers took advantage of the opportunity last year and set a 25 percent higher price, and they received quite a lot of profits during the past year. Now the population is in a state of expectation regarding price reduction. On the other hand, the purchasing power demand has decreased, that is, there are not so many people in RA who are able to close a mortgage and live in parallel. The decline in the number of real estate transactions will continue, and if this decline continues for several months, it will also have an impact on prices.”
According to the economist, the decrease in real estate prices can cause serious problems in the market, especially for those developers who work with loans. “Those people took a loan for their construction. In this case, if they lower the prices, their profitability will decrease sharply. As for the developers who started construction of buildings with their own money, they can be competitive in the market and lowering 25 percent will not have a negative impact on them.
There are not a few developers with loans, the financial issues and bankruptcy of their organizations can cause serious problems for the banking system and the real estate market. As you know, the banking system finances both the organizations and the individuals who purchase the apartments, and in this case the banking system may face serious problems. The real estate market will explode sooner or later. The problem is that the government and the Central Bureau of Investigation try to mitigate this explosion as much as possible. Such a situation existed in 2008-09, when we had a sharp decline in the construction industry. In the case of the RA economy, it is not the first time, you just have to try to prepare for all that.
It seems that the government and the National Assembly are showing such signs. Now the draft law on the freezing of loan funds is being discussed in the National Assembly, so to speak, it is not a good day. They see that there are organizations that may not finish their construction. For example, there are organizations that sold their apartments 3-4 years ago with various state programs and now they are facing the fact. The prices of building materials have increased and now they cannot cover their costs, because they sold the square for 700 dollars, and they cannot finish the construction with that amount.
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