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.