Today, real estate prices in Armenia keep on rising, however at the same time, you can notice construction going on everywhere around the city. For whom are the new buildings being built for and will the supply and demand law really function? After all, the rise in supply of homes must lead to the reduction of prices. We tried to get answers to these questions from some real estate agencies.
There are outlooks that the prices for homes will continue rising until the end of the year. This is due to the fact that there are “foreign businessmen” who have a high demand. In other words, the people who work abroad try to buy a home as soon as possible so that they can be here in the winter to remodel it. Compared to July, prices for real estate have risen by 20%, whereas compared to last year prices have doubled. Of course, the rise in prices differs from district to district. Prices are lower in the outskirts of the city. However, some real estate agents foresee a decrease in prices in the first couple of months of next year. We can make a rather impolite conclusion: the “money from abroad” lessen in the beginning of the year. But according to some market interveners, there will not be a large reduction even during the course of those months. The rise in prices is mainly caused by the old buildings and cheap homes. As for the newly built buildings, we get a different story.
Based on the information provided by different real estate agencies, we can deduce that the old and newly built buildings are different segments in the real estate market, in other words, they have “nothing in common”. The reason for this is that since the majority of buildings in Yerevan are “elite” and are not “affordable” for everyone, the people who demand those types of buildings are also different. It is obvious that the prices of new homes are higher that the old ones, however, real estate agents do not see a big rise in the new homes. According to one of the real estate agents, the prices of the homes being built on North avenue are already going down.
There is an interesting tendency in Yerevan today. There are homes which are already being sold, even though some are just being constructed or are in the process of being built. We can see a difference in opinions of intervening organizations here also. Some believe that the people have not come to terms with the “untouchable” homes, even when they are forced to pay a prepaid amount, sign a hypothec contract and obtain the house after a little while. Some real estate agents claim that there are buildings being built in the center of Yerevan which already have homeowners.
Now let’s draw our attention to real estate prices. We present the average statistics of one of the real estate agencies. The price for a 1 square meter home in a small corner of the city costs a minimum of 855 USD and maximum 1385 USD. In the middle of the city-725 USD and 970 USD respectively, 484 and 785 in the big center. The prices for homes in the Arabkir district are as follows: 650 USD and 825 USD in the first section, 520 USD and 730 USD in the second section, 390 USD and 550 USD respectively in the third section. However, these numbers are not “still as rock”. They depend on how many rooms there are in the home and on which floor the home is located. For example, the one room home with 1 square meter is more expensive than one with many rooms. The homes near the Cascade with windows looking out to the Tamanyan statue and the drinking fountain are in high demand. So, the price for 1 square meter for those homes reaches $2000 USD.
What can prevent the prices from rising?- political uprisings. The events which took place on April 12-13 of 2003 and October 27, 1999 proved that demand reduced during the course of a couple of months. This means that people evade living in a country where politics and economy are unstable.
In any case, one thing is clear. It is hard to say if real estate prices will go down in Armenia. As for the citizen who receives a salary a little above the average, he must wait for years until he feels what it is like to own a home (unless, of course, if he wins a home by “Family Lotto”).