Expert: One should not expect notable revival of real estate market in nearest future, however the prices will stop dropping

ArmInfo. One should not expect  notable revival of real estate market in the nearest future, however  the prices will stop dropping within upcoming six months, Director of  Bars Real Estate Agency Marina Chatinyan expressed this opinion in a  talk to ArmInfo's correspondent.  According to the expert this is  connected with the new government. "If we met a month ago my forecast  would be supposedly worse. I pin big hopes on the new Prime Minister  and believe that he will meet the given serious challenges", she  noted referring to the previous forecast, according to which the  market stagnation would have to continue for up to 2 years. According  to Chatinyan the upcoming six months will be decisive. "There are no  certain suppositions related to growth of prices, but something will  certainly change, let's hope the changes will be positive", she  stressed. 

According to the expert the current situation on the real estate  market is caused not so much by global trend but rather by the  country's internal situation, particularly by economic and political  instability, outflow of population and other factors. Chatinyan said  that in the USA and many other countries the prices on real estate  are growing and the market is not stagnating. While in Armenia supply  exceeds demand, the number of purchase/sale contracts and rent has  declined several fold during the recent two years, at the same time  more activity is registered on the secondary real estate market,  which is caused by drop of prices and reduction of housing  construction. Uncertainty related to the future of real state market  also plays a role. "A lot of people postpone sale till better days.  At the same time the Russian factor, particularly weakening of  Russian economy plays a great role in this issue according to the  expert. "Due to deterioration of financial conditions, the interest  of Armenian Diaspora in Russia towards purchasing estate in Armenia  has significantly dropped", she noted. 

At the same time the expert thinks that the current interest rates on  mortgage loans are ruinous. In developed European countries the  mortgage interest rates do not exceed 3%. In Armenia the minimal  threshold is 10%, which does not correspond to population's living  standard, she noted. "The interest rates on mortgage loans should not  exceed 5%, but in current conditions banks do not make any  concessions. As a result, half of court appeals accounts for  confiscation of real estate by the banks", the expert said. "In Bars  agency the share of mortgage contracts within "Affordable housing for  young people" state program is very small, it does not exceed 3%,  which shows that the program simplification was not efficient. "The  share of mortgage contracts is very small in our agency, the  situation on purchase of estate has not improved within recent two  years", she explained. 

The expert noted that because of crisis estate property (both  commercial and residential ones) was sold only in case of high  necessity. "Currently there are a lot of vacant indoor spaces in the  capital, which are on sale or for rent", Chatinyan stated. However,  drop of prices has not led to revival of the market. At the same time  she noted that lands, summer cottages and property on the fringes  have also dropped in prices. "Along with drop of prices the number of  purchases also fell", she stated. 

Chatinyan thinks that the current situation is a result of global  crisis and non-efficient government inside the country. In 2007 in  the period of economic ramp-up the prices on real estate were high,  as a result the market was much more active. Settled situation on the  border, economic and political sustainability, attractiveness and  protection of investments are needed first and foremost to recover  real estate market. 

However, the State Committee of the Real Estate Cadastre of Armenia  reports that the average market price of housing in Armenia grew over  year by 0.2% in August to 184.6 thsd AMD per 1 sq m. As compared to  the previous quarter, the average market price of housing rose by  0,003%. In August 2016 versus August 2015, 1 sq m of housing in  apartment buildings grew by 0.3% to 180.8 thsd AMD. Flats in Yerevan  cost 274.9 thsd AMD per 1 sq m (up 0.2% versus August 2015). In the  provinces flats cost 86.7 thsd AMD per 1 sq m (up 0.4% versus August  2015. 

Meanwhile, the average prices of private houses rose by 0.5% to 188.4  thsd AMD per 1 sq m. In Yerevan, the year-over-year and monthly  growth in price was insignificant, with the average price being 286.7  thsd AMD/1 sq m, whereas in the provinces the price of 1 sq m in  private houses grew by 0.1% over year to 89.9 thsd AMD. 1 sq m of  housing in Yerevan (in apartment buildings and private houses) rose  in price by 0.1% versus August 2015 and totaled 280.8 thsd AMD,  whereas 1 sq m of housing in provinces made up 88.4 thsd AMD, with a  0.2% growth versus August 2015.

The source says that the highest prices of flats in Yerevan are in  Kentron (Center) district - 428.3 thsd AMD per 1 sq m (up 0.1% versus  August 2015). Arabkir district ranks next with 357.4 thsd AMD per 1  sq m (up 0.2% versus August 2015). The highest prices of private  houses are also registered in these districts:  Kentron - 476.4 thsd  AMD per 1 sq m, and Arabkir - 383.2 thsd AMD per 1 sq m. 

The lowest prices of flats and private houses in Yerevan are fixed in  Nubarashen district 157.5 thsd AMD per 1 sq m (0.4% y-o-y growth) and  150.8 thsd AMD per 1 sq m (no y- o-y change).

As regards the provinces, the highest prices of private houses are  fixed in the resort town of Tsaghkadzor (Kotayk province) - 305 thsd  AMD per 1 sq m. Abovyan (Kotayk province) ranks next - 157.4 thsd AMD  per 1 sq m, with Vagharshapat (Armavir province) holding the third  position - 153.2 thsd AMD per 1 sq m.  The prices of flats are also  the highest in the specified three towns: Tsaghkadzor - 292.4 thsd  AMD per 1 sq m, Abovyan - 155.2 thsd AMD per 1 sq m, and Vagharshapat  - 154.2 thsd AMD per 1 sq m.