Real estate expert opinion: It is shortsighted to actively continue  housing construction with the expected decrease in demand

ArmInfo. In Yerevan, in the first half of 2021, 27984 real estate transactions were concluded, which is 23.7% higher than a year ago. According to the data of the  RA Real Estate Cadastre State Committee, out of the total number of  these transactions, purchase and sale accounts for 27% or 7,574  transactions, with an annual growth of 26.7%.

At the same time, the  highest percentage of transactions fell on the administrative region  of Arabkir - 18.2%, and the lowest - in Nubarashen (0.7%).  The share  of real estate lease transactions in the capital accounts for 9.9% or  2,779 transactions, which is 7.6% less than a year ago.

However, such a significant increase in purchase and sale  transactions can in no way be associated with the observed decrease  in the average market value of housing in apartment buildings in  Yerevan. So, according to cadastral data, in the first half of 2021,  compared to the same period in 2020, prices decreased by 5.1% - to  328.4 thousand drams / 1 sq. m.

For half a year, such price dynamics, according to the director of  the Real Estate Exchange, economist Artyom Pribylsky, is  insignificant. Moreover, in a conversation with an ArmInfo  correspondent, he noted that with such an increase in the number of  transactions, the rise in prices should have been proportional - at  the level of 20%. In this context, the expert noted that stagnation  is observed in the real estate market of Armenia, which he had  predicted earlier.

Analyzing the current situation, Pribylsky did not rule out that such  a situation is associated with the activity of construction, which  dates back to the moment Nikol Pashinyan's government came to power.   "The new government came at the end of the first half of 2018, and  from that moment an active process of buying up land and construction  began. And it turns out that today real estate is bought by those who  applied in advance, paid a certain amount," Pribylsky explained.

At the same time, the head of the Real Estate Exchange noted that  developers in Armenia continue to build in spite of everything, and  this, in his opinion, is a short-sighted position. "Before the events  of 2020 known to us, new buildings were quickly, efficiently and in  large quantities sold to both our citizens and foreigners. But I  think that next year we will face a situation when there will be a  large number of buildings in the capital, but they will be no  purchase, "- said Pribylsky. At the same time, he drew attention to  the fact that property tax will also affect the purchase of real  estate in the country. In this vein, it is appropriate to cite  statistics, according to which 359 buildings were built in Armenia in  the first half of the year, with an annual growth of 2.1-fold. The  area of construction works in the republic was 95,919 sq. m., which  is 2.4- fold more than a year ago.

In addition, the head of the Real Estate Exchange drew attention to  the fact that the growth of transactions was provoked by the desire  of many in Armenia to get rid of their real estate as soon as  possible. In this context, the expert noted that at the moment there  are more real estate sellers in the country than buyers.  "Under  different circumstances, if there were no migration, these figures  would have been completely different," he noted (in the first half of  the year, the negative migration balance increased by 23.2% per annum  - ed. note).

According to cadastral data, out of the total number of real estate  purchase and sale transactions made in Yerevan, apartments account  for 60.6% or 4,592 transactions. On an annualized basis, this  indicator jumped by 32.9%. After apartments, the largest number of  transactions for the purchase and sale of real estate in the capital  falls on transactions with private houses - 901 or 11.9% (with an  annual growth of 27.4%), followed by transactions with garages - 826  or 10.9% ( with an annual growth of 36.3%), land - 664 or 8.7% (with  an annual decline of 3.8%), public buildings - 512 or 6.7% (with an  annual growth of 17.2%), and the least interesting is real estate of  industrial value - 79 or 1% (with an annual decline of 6%).  The  highest prices for apartments in Yerevan are traditionally held by  the Kentron (Center) community - on average 611.2 thousand AMD / 1  sq. m (an annual decline of 8.2%). This is followed by Arabkir, where  the price of apartments is fixed at 440.5 thousand drams / 1 sq. m.  (an annual decline of 4.7%). Kanaker- Zeytun closes the top three  with a cost of AMD 316 thousand / 1 sq. m. (annual decline of 6.1%).  The lowest housing prices in the capital remain in the Nubarashen  community, where a square meter of an apartment averaged 175.5  thousand drams / 1 sq. m., with an annual decline of 6.8%.

In total, 91,157 real estate transactions were carried out in Armenia  in the first half of the year, which is 27.5% more than a year ago.  Of the total, purchase and sale transactions account for 27.4% or  24,961, with an increase of 24.9% over the year. At the same time,  7,029 transactions for the purchase and sale of apartments were made  in Armenia, with an annual growth of 27.8%.  To recall, the Armenian  parliament at an extraordinary meeting on June 25, 2020 amended the  Tax Code.  The updated version provides for the use of new mechanisms  for calculating property tax, based on its market, rather than  cadastral price. However, this process will be carried out in stages  over six years. In particular, in 2021, the accrual will be carried  out in the amount of 25% of the market value of the property, with a  subsequent annual increase also by 25%. In addition, an annual rate  of 1.5% of its value will be applied to property worth 200 million  AMD and more, instead of the previously planned 1%. Thus, the  citizens of the country will feel the first insignificant increase in  the amount of the property tax in 2.5 years - from December 1, 2022.