Rising prices for second homes do not correspond to the reality of the economy

Baku/05.02.14/Turan : In January, prices on the secondary housing market (SHM) of the capital , on average grew by 5 % depending on the location of houses .

Experts believe that there are several reasons. First, the potential buyer prefers resellers to new development, secondly, many houses built 7-15 years ago were only gasified at the end of the year and thirdly, revived issuance of mortgage loans by banks. Also a role in the investment sector is played by Azerbaijanis living abroad. Due to variation in house prices from the street Istiglaliyyat in the Sabail district streets to the unknown island Pirallahi sub district it is wrong to speak of average prices , especially since the spread is large - from $ 300 to 5 000 and even more for 1 square meter.

Despite the growth in supply, demand did not increase compared with December. By tradition, the most attractive areas are Sabail and Khatai. The former leaders ( Yasamal , Narimanov and Nasimi districts ) lag behind the competitors in connection with the government's plans to demolish houses. In the same comprehensive portfolio of proposals the share of these areas was more than 75 % in January.

The main reason for the formation of most of the proposals in these four areas is that the buildings are resold, creating a secondary market, and these areas are beneficial for mortgage lending.

As before, people prefer small-sized housing to 4 and 5 room apartments. Because the asking price for a two-room flat in the high-rises near the farthest metro station Azi Aslanov is from 70 to 80 thousand manats. The real cost of housing in this case is 1.5 times lower. The price is also inflated by brokers and the situation - the owners fear that selling an apartment , they can only rely on adequate housing in the suburbs of Baku .

Nevertheless, the population has become exemplary payer of interest on consumer loans, and pawns housing, borrowing money to expand the living space. Therefore, the greatest demand (about 55 %) is for two-and three-room apartments at a price exceeding the average level ($ 2 million).

Experts believe that the increase in prices in recent months was the result of mortgage lending, home buying by Azerbaijanis working in Russia, as well as compensation issued to people whose homes went under demolition.

The impetus for activation of the market is also a simplification of the issuance of bank loans. Professionals working in this field believe that the price increase cannot be explained only by mortgage lending. If this continues, the prices may again reach their record level. In the coming days prices will continue to rise with the apparent activity in the market.

In January, the other major cities of the country also faced the activation of SHM and a relative rise in prices.

For reference, last year (reference by AR Central Bank as of December 1), the aggregate turnover of the real estate market , in accordance with the cash flow of notaries , grew by 38.6% and exceeded 3 billion 495 million 675 thousand manats.

The Central Bank noted the increase in the share of intermediaries (realtors, banks and notaries) for transactions with residential property by 26%. The gains of the intermediaries were 399 million 119 thousand manats against 316.8 mln a year earlier. - 17D -