By Anna SaghabalianThe growth in prices of real estate in Yerevan continued this year but appears to have stalled now because of the approaching presidential election, realtors said on Monday.
According to the most recent data released by the State Real Estate Cadastre, the average of price of apartments and commercial property in Yerevan, set in Armenian drams, rose by 4 percent in the first half of 2007.
Some local estate agents believe that the first-half price rise was actually higher, especially in areas outside the city center, the focal point of Armenia’s ongoing construction boom. They say housing prices in Yerevan suburbs were up by at least 10 percent from the second half of last year.
Market watchers say one of the reasons for strong demand in suburb apartments is the development of mortgage lending in the country. The number of ordinary Armenians buying apartments with a mortgage has grown considerably in the last few years despite the continuing high cost of such borrowing. The mortgage lending portfolio of local banks is now estimated at 35 billion drams ($115 million).
“I am surprised at this trend because mortgage rates remain quite high,” said Gevorg Avagian, who manages a real estate firm in Yerevan. “The rates should not have exceeded 8 percent. And yet the minimum rate I’ve seen is 11 percent.”
Real estate prices have skyrocketed since 2000 not only in Yerevan, where an apartment in the city center could be worth as much as $2,500 per square meter, but other parts of Armenia. In the second largest city of Gyumri, for example, a square meter of office space and other commercial property is now said to be three times more expensive than it was in 2004.
But in the words of Vartan Toghikian, a property valuation agent, the growth in prices traditionally slows or stops altogether in the run-up to national elections and the February 19 presidential vote will not be exception to this rule. “Big buyers are in a wait-and-see mood right now,” Toghikian told RFE/RL.
“The prices may even go down a little because of the elections,” he said. “But they won’t go up for sure.”