ArmInfo. The Central Bank of Armenia expects stable domestic demand to remain high, driven by several factors: an increase in average income, a rise in savings up to a maximum of 23% of GDP, and an increase in consumer loans (partly related to mortgages). Inflation in the services sector is also being taken into account. This opinion was expressed by Deputy Chairman of the Central Bank of Armenia Hovhannes Khachatryan at a press conference on May 5.
According to Khachatryan, one of the scenarios being considered by the Central Bank (Type B) involves a poor economic situation in Russia and the European Union, which affects external demand and the volume of transfers. He noted that in the first quarter of this year, due to geopolitical uncertainty, volatility, and a significant increase in energy prices, the risks of weakening demand in the global economy and the economies of Armenia's trading partners have sharply increased. However, as Khachatryan emphasized, solid domestic demand remains at the moment. "We don't see a lack of investment activity even in macroeconomic indicators," he said.
Regarding whether the Central Bank remains concerned about an "overheating" real estate market, Khachatryan stated that it was first voiced two and a half years ago, when a widening gap between base prices and market prices was observed. "We are considering various scenarios for closing this gap. Specifically, the risky scenario involves closing the gap through a sharp downward adjustment, but there were also questions related to the suspension of the mortgage income tax refund program in Yerevan. Another scenario considered the possibility that the gap would close over time, meaning incomes would increase, and real estate prices would either slow down or stop growing. We're leaning toward the second scenario we're currently seeing a slight increase in real estate prices, and I think this gap will close over time."
It's worth noting that the state income tax refund program for mortgage holders in Yerevan ceased to apply in 2025, but it continues in the regions. Armenian authorities plan to completely abolish the income tax refund on mortgages starting in 2029. The abolition will be gradual. Thus, after January 1, 2027, income tax on mortgages in the primary market will not be refunded if the property is located in the regions near Yerevan Aragatsotn, Ararat, Armavir, and Kotayk. From January 1, 2029, income tax refunds on mortgages will also cease to apply in the remaining regions. These restrictions will not apply to border settlements. Recall, the state program for income tax refunds on mortgage loans for primary market housing purchases (apartments in new buildings or new private homes) has been in effect in Armenia since November 2014. Overall, from 2015-2024, 209.7 billion drams ($529 million) were refunded from the state budget to citizens who took advantage of this program. In 2025, this amount will be AMD 96.67 billion, or $253 million (the initially planned AMD 84.07 billion, plus an additional AMD 12.6 billion allocated).
