Why Are Apartment Prices Rising

In Armenia, the increase in apartment prices in 2022 is not driven by an influx of foreign citizens leading to heightened demand. This was stated today at a press conference by Arman Petrosyan, the Deputy Chairman of the State Committee of Real Estate Cadastre.

He asserted that the number of properties purchased by foreigners is too small to impact market prices significantly. Foreigners mainly bought apartments and houses in Yerevan, with Kotayk province following in second place.

Regarding the price increase in the real estate market this year, the deputy chairman of the cadastre noted that economic conditions primarily affect price formation. "Since the real estate market is the first to respond to ongoing processes in the economy, and given that we have a 14.1% growth in economic activity over the last nine months, this is the primary factor affecting the increase in purchasing demand," he stated.

According to Petrosyan, the rise in prices has also been driven by increased construction costs, the depreciation of the dram against the dollar and euro, and favorable conditions for mortgage lending. Furthermore, he explained that citizens typically invest their disposable income in real estate. This year, the increase in rental prices has also encouraged citizens to purchase apartments for rental income.

However, according to official statistics, the number of rental transactions in 2022 did not increase; in fact, it decreased by 9.2% compared to 2021. The deputy chairman of the cadastre committee does not consider this statistic credible, noting that rental transactions are often not formalized with contracts and therefore are not registered by the state.

“To clarify my point, let me provide this statistic: in the first ten months of 2022, only 124 apartments were rented by foreign citizens in Yerevan. Given the recent events and the many citizens who have moved from Russia to Armenia and are living in rented apartments, it becomes clear that these statistics are distorted. In reality, these numbers are multiple times higher,” said Petrosyan.

It should be noted that according to the statistics published by the Cadastre Committee, in October 2022, apartment prices in Yerevan increased by 12.9% compared to October 2021, while in the provinces, the increase was 19.1%.