Secondary housing market will be forced to give up the position

In April, the secondary housing market (SHM) of the capital increased in prices traditionally (an average of 1 %), depending on the location of the houses. Demolition on the Avenue Narimanov (former Sovetskaya) began, increasing excitement in the electronic media. However, if the demolition of dilapidated houses in the streets Fizuli, Badalbayli and Mirzaaga Aliyev caused a sharp rise in prices in this segment (20 to 40 % in 2010 - 12 years) , now prices are rising moderately, though not naturally.

According to the monitoring by Turan, popular in comparison with the primary housing market, this segment will continue to maintain a high level of relative prices due to distrust of new buildings, which still depend on utility orders by MOE.

In Azerbaijan secondary housing is higher priority compared to new buildings for several reasons, the chairman of the Center for Economic Research Ghalib Togrul said. According to him, this is due to the state registration - a prerequisite for all types of transactions with residential premises. "Old buildings in a matter of days pass from hand to hand, which can not be said about the housing, where you have to comply with the regulations of the Ministry of Emergency Situations," he says. In addition, officials with less activity "trigger hands in pocket" of a secondary housing owner, as he has no obligations to superintendents appointed by the owners of buildings.

So, by law, in the event of ownership of an apartment in a new building in participatory construction gives rise to a share in the ownership of the common property in the apartment house. Registration of ownership rights to the apartment is also the state registration of ownership of the common property. For this owner pays extra money. Today only one Court of Appeal hears a hundred complaints a week from the owners of apartments in new buildings on the lack of basic services, but it is not so in the secondary market.

Such differences lead to the fact that many potential buyers of apartments are simply afraid to invest in shared construction, especially in the early stages, leading to a heterogeneous structure of the housing market. If by 2010 the housing market was in balance proportion of supply (often clients prefer to invest in Stalin or Leningrad projects), now the advantage goes not only for planning and territorial division - more people want to shelter a larger area with a plan to rebuild it in their sole discretion.

Thus the structure of the sector offers the number of rooms actually remained constant and uniform: 35 % accounted for one-room, 43% - to two-room and 22% - for three-room apartments.

According to the realty agent Bayram Abbasov in Ganja, in the next 5 years the primary market will prevail on the secondary real estate market due to depreciation. "Most of the secondary housing built during the Soviet period (30-80 years) is due to a greater risk when purchasing it," he says. Most analysts also predict real estate market conditions change in favor of the primary market, which is primarily due to increased control over registration of transactions in this segment and as a result, decrease in the proportion of risk for a potential buyer faced with unscrupulous developers. This leads to a narrowing of the price range between the primary and secondary housing - as a result, buyers tend to buy a new home. Increased demand for primary housing market is also associated with increased buying interest in individual suburban housing, which is especially observed in Baku, Ganja, Sumgait, Lankaran and Shirvan, where urbanization has a strong impact on the interest of the privateers.

Taking into account the rapid growth of supply in all categories of SHM, suburban real estate even in economy class, which was not the case for the past years, real estate market analysts do not expect significant dynamics, particularly in the spring and summer (April to September). According to forecasts, in summer 2014 the growth will not exceed 2% per month.

Most liquid objects of suburban real estate market is currently considered cottages in built settlements (e.g., Gobustan) and plots for individual building. By the way, all the major regional centers, including Ganja, are still behind the Baku level of demand for suburban housing.

According to Abbasov , SHM does not soon collapse least because in 2013 the State Oil Company of Azerbaijan (SOCAR) connected to the gas supply 149 multi-family buildings (30 374 apartments), which was the largest market segment of activity in the primary housing.

Deputy Chairman of Public Association Promoting Economic Initiatives Rovshan Agayev believes that the already inflated price level of second homes in the middle of the second quarter will be higher. Building materials also rise, he said. And this is due not only to the eviction of residents, most of which are nestled in a residential area from 15 to 20 sq. m. per family because of the unfair compensation (1,500 AZN per sq. m.) and are forced to take a bank loan and other kind of debt to buy a home. He believes that in the conditions of the city of Baku, where the price of two-room apartments (except cheaper houses with a yard system) varies from 40 to 500 thousand manat and more ($ 51 thousand - $ 640 thousand), it makes no sense to talk about average prices.

Rovshan Agayev as well as other experts believes that all segments of the housing, including rental apartments, are unreasonably expensive and objective indicator of this is the bulk of the income of citizens. According to the State Statistics Committee, in 2013, every Azerbaijani earned 3,705.7 manats. The technique itself is counting wrong, equalizing state employees and retirees with an income of 120 - 170 manats a month and hundreds of millions of oligarchs bred in offshore zones.

If you follow the logic of the State Statistics Committee, the average citizen in the case of refusal of food and water will buy a studio apartment in the Pirallahi sub district of the capital for 8 years, and in not the most expensive Yasamal - for 30 years.

However, the same State Statistics Committee estimates that people spend their 64.3 % of their income on the purchase of goods and services, 10.1 % of cash income - to pay taxes, fees, insurance premiums and loans. In addition, there is children's education, health and a lot of different items of expenditure discarding the dream of an average Azerbaijani about an apartment. -17B-