Prices of Sold Apartments Will Decrease by 30%, Mortgage Loans Are Being Halved

This year, the prices of sold apartments are expected to decrease by 30 percent. Transactions at previous market prices are no longer taking place due to a 70 percent decrease in the number of customers. In an interview with Tert.am, Vahe Danielyan, the director of the "Center" real estate agency, addressed the problems in the real estate sector caused by the coronavirus and the anticipated price changes.

According to him, the rents of apartments have decreased by 30-40 percent. The price drop for apartments in the center has reached even 50 percent, as these apartments are primarily rented to foreigners. In the outskirts, prices for lower-budget apartments have decreased less. The drop in apartment prices is attributed to several factors. Previously, students coming from regions used to rent apartments in the outskirts, but the closure of educational institutions related to the pandemic has also affected the prices of these types of housing.

“Many people haven’t worked or received salaries for two months and can’t afford to pay for their rent, and all this leads to a chain reaction that drives prices down. For now, we cannot expect anything good in this sector,” he noted.

Vahe Danielyan affirmed that before the spread of the virus, the price of newly constructed apartments in the Small Center was 1,500,000 drams per square meter. In the Large Center, apartments could be purchased within the range of 500,000 to 1,500,000 drams per square meter. “Prices for newly constructed buildings in the outskirts were quite high, as buyers were mainly obtaining property through income tax. For example, in Davitashen, semi-finished buildings cost 400,000 to 450,000 drams per square meter,” he mentioned.

According to the director of the "Center" real estate agency, newly constructed but unfinished apartments will suffer more now. Builders take loans from banks and settle the loan obligations only after sales. “Currently, some banks are halting mortgage loans by half. This means they are financing newly constructed buildings, while they do not provide funding for the secondary market, which will further reduce the number of buyers and the price drop. We wanted to make deals with several banks, but they refused. Banks mainly provide mortgages for the buildings they finance, while they do not fund the rest,” he noted.

According to Vahe Danielyan, this situation is likely related to the fact that many citizens have taken their deposits out due to the crisis, while some are unable to fulfill their loan obligations.