Apartment Transactions in Yerevan Decreased by 30% in 2023: Hetq

In 2023, a total of 50,059 real estate transactions were conducted in Armenia. According to data from the Cadastre Committee, this marks a decline of 5.4% compared to the previous year. Hetq reports that the real estate market experienced a 'boom' in transactions in 2021.

Market agents attributed the activity in 2021 primarily to the limitations of the income tax refund program, which led citizens to rush to take advantage of the program, as well as delayed transactions from 2020 and other factors. However, this demand has not been sustained over the past two years.

Vahe Danielyan, director of the 'Kentron' real estate agency, notes that the decline in real estate transactions is attributed to low income growth among the population and the outflow of some Russian citizens. 'In recent years, real estate prices in Armenia have increased significantly, while people’s incomes have remained modest. Prices have reached a level that prevents many from purchasing property. Some Russians have also departed Armenia, which has decreased their demand for rentals. People see that the opportunity to rent at high prices is diminishing, and they are not purchasing new apartments for rental purposes,' says Danielyan.

A significant downturn in transactions has been recorded in the capital city, Yerevan. Last year, a total of 13,512 real estate transactions were completed in Yerevan, marking a decline of 23.8% compared to 2022. Analysis of the data indicates that the number of apartment sales in Yerevan has dropped by 29.6%. The income tax refund program is gradually being phased out in Yerevan. It has already ceased in Kentron and Arabkir and will end for all of Yerevan by the end of this year.

According to Danielyan, since the program has not been active in the Central and surrounding administrative districts, this has affected the decline in apartment sales transactions. The system of income tax refunds for mortgage loan payments will cease to operate in regions adjacent to Yerevan by 2027 and in other regions by 2029, with the exception of border villages. As this program has been one of the main driving forces behind housing construction and apartment sales, it is likely that the number of transactions will continue to decrease this year.

Notably, apartment sales have decreased in all of Yerevan’s administrative districts except for Kanaker-Zeytun. The most visible declines have been in Arabkir, Kentron, Davtashen, and Nor-Nork. Despite the decrease in sales, apartment prices in Yerevan continued to rise especially in the first half of 2023. According to the Cadastre Committee, apartment prices in Yerevan increased by 10.3% in 2023 compared to 2022. Price increases have been recorded in all administrative districts.

The most expensive apartments are located in the Kentron administrative district, followed by Arabkir, Davtashen, and Kanaker-Zeytun. The highest percentage increase in apartment prices in 2023 has been found in Kentron, where the average price per square meter is about 834,000 AMD, equivalent to approximately $2,100 at today’s exchange rate.

However, data from Norq-Marash is missing as the Cadastre Committee could not include it in the analysis due to a low number of transactions in that administrative district. Danielyan observes that this price inflation is attributed to the trends recorded in the first half of the year. Cadastre data indicates that the inflation has already ceased by the end of the year.

'Now there is a tendency for prices to decline. This may last for another 2-3 months, but it is expected that prices will rise again after that. This decline will be short-term. Price fluctuations are always present in the real estate market - they go up and down, but in the long term, there is an overall increase,' says Danielyan.

Real estate agent Agasi Avagyan also notes that the high inflation of apartment prices in recent years has eased, but he does not foresee significant price drops in the near future. 'There are no grounds for a substantial price decrease today, despite the absence of high growth. The gradual phase-out of the income tax program adversely affects market transactions, but I believe there are currently no grounds to talk about a significant price drop,' says the real estate agent.

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