Gap between new housing supply and new homes in Armenia –

Author: Daniel Alejandro Restrepo Tabares

The figures indicate that 5,480 homes are created every two years in Armenia, a figure that does not match the housing units available in the city.

The deficit in new housing will be around 3,700 housing units for this year according to the observatory’s estimates.

The Armenian Real Estate Observatory published a report showing a significant difference between the supply of new housing and the creation of homes. According to Juan Carlos Vásquez Sora, coordinator of the observatory, he explained that the offer of new housing is a basic process to guarantee that the new homes that are created in a city have a place to live.

To monitor both housing supply and household creation in Armenia, the observatory grouped four indicators: new housing launches, which represent the number of housing projects that builders bring to the market. They can be in different phases, such as project or pre-sale.

New housing starts: this is the actual start of housing construction and shows how many housing units (in number or square meters) have started construction in a given period.

New home sales, reflecting market demand. The other variable is the Number of homes that are created in a given period. It is a function of the population dynamics of the city.

“With the information from Camacol’s building activity bulletins for the months of February of the years 2020, 2023 and 2024, the number of housing units in the launch, initiation and sales stages between the months of January and December was obtained. in biennial periods. From the Dane housing and household projection, the number of new biannual homes was obtained, between the months of January and December,” explained Vásquez Sora.

According to the results, the dynamics of launches have remained stable between 2,114 and 2,529 housing units between 2019 and 2022. Between January 2022 and December 2023, launches were reduced to 1,301 housing units.

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“Initiations follow a similar dynamic to launches for obvious reasons, although with a slight delay. The low dynamics of launches between January 2021 and December 2022 means that initiations match them, showing similar numbers for the period January 2022 to December 2022,” said the economic analyst.

He said that sales, which showed important and close numbers with the net creation of homes, are in clear decline, as a result of factors such as high mortgage interest rates that increased due to the high levels shown by the Bank’s monetary policy interest rate. of the Republic and the completion of subsidy schemes for the purchase of new housing. On the other hand, the net creation of households has shown a stable behavior, of around 5,480 households every two years on average.

“The biannual creation of households that has shown stable figures is generating important differences with the decrease that the indicators of launch, initiation and sale of new housing in Armenia have shown. Indeed, the turning point in the period January 2021 to December 2022 responds to the low growth in new housing launches and initiations. Sales that came with good dynamics show a continuous drop from 4,618 units from January 2019 to December 2020 to 1,840 from January 2022 to December 2023,” he indicated.

In these terms, the analyst explains, the deficit in new housing will be around 3,700 housing units by 2024. Greater demand in the face of reduced supply will end up putting upward pressure on prices, which is expected to increase the value of the metro. square of new housing this year.

“An aggressive policy to reactivate the sector is urgently needed from the national government to encourage the purchase of new housing, which allows maintaining the construction dynamics and therefore balances the market, maintaining reasonable prices per square meter for Armenia,” concluded the subject expert. economical.

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