• COVID-19 impact on the Real Estate sale prices in Armenia
Today, there is an atmosphere of panic and uncertainty around the world due to the spread of COVID-19, which has a huge impact on the world economy. In some countries, the government tries to alleviate the financial force-majeure situation of population, related to the coercive vacation in the state of emergency by assisting in tax load, utility payments etc.
Financial market faces serious challenges, especially the banks providing credit vacations to the borrowers, which leads to the decrease in predictable interest rates and in case of continuous nature, it may create serious obstacles for the activities of the Armenian banks. The situation is complicated and critical for all the sectors of the economy. According to the current prognosis, the likelihood of bankruptcy of small and medium businesses will increase in case the situation is not changed and the state of emergency is further prolonged.
A reflection on the situation of the Real Estate market and its possible development in Armenia.
COVID-19 has caused a qualitative discrepancy in supply and demand in the Real Estate market, despite the fact that the number of apartments for sale has not decreased.
We are witnessing two different situations:
- Homeowners try to sell their property as quickly as possible, while the customers (purchasers) refuse to visit the apartments because of the fear of being infected with coronavirus. Thus, it turns out that the owner starts to gradually decrease the price of the apartment to the point, so that the customer is interested. Some customers, considering the good price offer and assuming that the property price will keep rising again after the COVID-19 decline, so they find ways to see the property. Moreover, they are tempted to buy the apartment, ignoring its minor defects, which would otherwise be of great importance. In fact, in this case, the Real Estate prices are falling due to the COVID-19.
- We are also witnessing to another situation; the customers, who do not have time to wait for the epidemic to slow down, in the state of emergency try to reach an agreement with the homeowners and to visit their Real Estate. Agents and individual customers, in turn, try to persuade the seller to organize the home display. After some calls, the homeowners realize that customers are really interested and they are trying to take advantage of the opportunity by raising the prices. In this case, the epidemic indirectly leads to the rise in Real Estate prices in the market.
These two contradictory situations at the initial stage of the emergency still keep the Real Estate market in balance; that is to say, they balance each other. It is difficult to predict how long this situation will continue and what kind of consequences it will have. In any case, it is clear that the Real Estate market, like other sectors of the economy, is in a recession, with a decrease in market activity. If such an incomprehensible situation persists in the country, it will be very difficult to avoid falling prices in the Real Estate market, as the number of homeowners wanting to sell their Real Estate in times of emergency and other equal conditions will prefer the number of customers looking to buy Real Estate in the short term. The crisis in the market property is inevitable.
• The impact of COVID-19 on the Real Estate rental prices in Armenia
The real estate market has also not been affected by the impact of the coronavirus epidemic. In this case there are two contradicting scenarios, which are unfortunately not equivalent.
- As we know, the Republic of Armenia has closed its borders for foreigners, so not the decrease in the number of tourists, but in this case, the reduction, has reduced the demand for the rented apartments and short-term rentals to 2 months in this context. Daily renting is in the crisis.
- On the other hand, any Armenian who has returned to the country, is obliged to be self-isolated for 14 days. Some citizens arriving in Armenia are self-isolated in their apartments or they rent a hotel room, while others rent an apartment, minimizing the likelihood of infecting their relatives or other hotel guests. Apartments for daily rent are more demanded. In other circumstances, the owners who rented an apartment would raise the price of the property to cover the risks and disinfection costs. But the situation is different; pre-booked apartments for tourists remain vacant, except for those few who want to be isolated, there is no other demand for these apartments. So in this case too, homeowners are significantly reducing the cost of renting apartments. For example, a one-day renting apartment in the center now starts at 5,000 drams or more, instead of the previous 10,000 drams.
- As for long-term rental apartments, no significant changes have been observed in this area. If epidemic rates slow down, the long-term rental market will continue to operate at its previous rates.
Thus, COVID-19 does have some effect on the rental housing market.
The Best House Real Estate agency continues its normal operations despite the state of emergency, meeting all sanitary requirements; the agents make visits with special protective masks and gloves, disinfection means and, if needed, take care of both parties.
Please visit www.besthouse.am Real Estate website to learn more about our services.