Do rising prices for secondary homes have a plank?

In March in the capital and other cities of Azerbaijan prices on the secondary housing market (SHM) increased on average by 1.5%. The growth trend continues for the third month amid speculation and then the February demolition of houses along the avenue Nariman Narimanov (former Sovetskaya).

Compared with the end of last year, market activity higher increased in the number of transactions. According to estimates, the average price for 1 square meter for sale apartments in November was $ 1,560. In comparison with the same period last year, prices have increased by 15%, and compared to December last year - by 10%.

Nearly two-thirds or 63 % of the proposed owners (owner) housing up cost, no maintenance or repair with an average, below average cost of an apartment, that is $ 1.3 thousand per 1 sq. meter. During this period a special price increase was traditionally fixed for 1-2 bedroom apartments, housing more usable space than hunters - mostly wealthy citizens (entrepreneurs, managers and officials) in the city center. If at the end of last year the most attractive ones were the Sabail and Yasamal districts of the capital, now due to the demolition of the houses here the championship belongs to the Narimanov, Nasimi and Khatai. Their share in the portfolio of proposals is at 75%.

Higher prices for SHM is explained with a number of reasons, including discrepancy of the supply and artificially inflated demand. The secondary housing market has narrow segment of quality apartments, whose prices are more expensive than in other items, said the expert of the public association Promoting Economic Initiatives, Samir Aliyev.

According to him, the situation also affects the growth of mortgage lending in connection with the facilitation and increase a credit ceiling from 30 to 50 thousand manats. This amount is roughly half of what is sold at property owners’ request. Mortgage for a long time will affect the price hike in the segment of the secondary housing - says the expert. This will lead to an increase in demand over supply.

The expert considers reasonable apartment prices depending on consumer inflation that eats the savings of the owners of Soviet-type homes and willing to exchange their apartments for their children to get a separate family.

The most serious spike (200 % for the year) was observed on the secondary market in 2008 with the boom, when only in Baku there were about 200 construction companies erecting substandard building. In addition, without a license, they built and sold exclusively in skyscrapers one apartment to several buyers. As a result, potential buyers do not trust traders.

The second stage price increase occurred in the midst of the economic crisis in 2010. Senior government officials and executive authorities of the capital mass demolitions in the streets Fizuli, Dilara Aliyeva and Shamsi Badalbayli prevented the fall in prices in the secondary and primary market. Experts predict that prices will not drop until this segment is run by managers and official oligarchs. - 17B-