Azerbaijan, Baku, Aug.19 / Trend U. Ismayilova /
The activity of the Azerbaijani real estate market decreased by 5-6 percent for the first half of August, the MBA Group consulting company Director General, Nusrat Ibrahimov, said.
"The activity of the market declined because of the banks' limited resources to finance mortgage lending in Azerbaijan," Ibrahimov said.
Since resuming mortgage lending in Azerbaijan, on June 1, 2009, the total amount of mortgage lending through the Azerbaijani Mortgage Fund (AMF), acting under the Central Bank, has exceeded 25 million manat. However, favorable terms for mortgage loans have increased demand. The Fund defined loan limits for authorized banks to remove the difference between existing funds and granted loans. The Fund issued secure bonds worth 55 million manat. Bonds worth 25 million manat of the total bonds have already been made. The 2009 public budget has allocated 14 million manat to finance social mortgage lending. The Fund did not rule out the possibility of an increase in mortgage lending in 2009.
According to Ibrahimov, in July average prices in the country's real estate market rose by 0.5 percent, which was associated with re-mortgages by the AMF in the country, which had been suspended during the summer of 2007 due to a lack of funds.
According to the expert, prices in the secondary market, for the cheapest apartments, have increased by 2.7 percent and in the primary market they have decreased by 2.6 percent.
In July, the land market also dropped in price by 0,3 percent, while the market for commercial properties went up by 2.8 percent thanks to the seasonal period. Prices for non-residential rental facilities went up by 0.1 percent.
It is possible that a relative increase in activity in the real estate market will be experienced in September, due to the seasonal period. However, this growth will be modest; full activity of the real estate market can only be recovered from mid 2010, Ibrahimov said.
Regarding the rate of construction in the country, the expert said that at present the situation for small and medium-sized construction companies was difficult, because the rate of construction work declined by 10-12 percent since early 2009 and by 20-25 percent compared to the same period of 2008.
This situation is leading these companies completing the first stage of construction, and then leaving the market, Ibrahimov said.
Because of the decline in construction work, there may also be more frequent conflicts between companies and the owners of flats that are still uncompleted.
The situation in the market adversely affects assessment activities in the country. For earlier the assessment companies received 10 appeals for property assessment per a day as a result of the resumption of the mortgage lending, but today that figure has fallen to one appeal every two days.
Since mortgage lending in Azerbaijan resumed on June 1, 2009, about 600 people have received mortgage loans worth 25 million manat through the Azerbaijani Mortgage Fund (AMF), working under the Central Bank. Since March 2006, total funding through the AMF has exceeded 100 million manat. As a result, about 2,600 families have been able to solve their housing problems and pay for their social needs. The fund issued mortgage loans worth 16 million manat in July.
The maximum sum of common mortgage loans in Azerbaijan amounted to 50,000 manat at 8 percent per year for a 25 year term and social mortgages amounted to 35,000 manat at 4 percent per year for 30 years. An initial payment for common and lax loans is 15 percent.
In connection with the launch of mortgage lending 17 banks authorized by the AMF were approved.
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