Azerbaijan develops model of predicting price "bubble" on real estate market
Azerbaijan, Baku, Oct. 26 / Trend A. Akhundov /
The Azerbaijani Central Bank (CBA) developed a model to predict a price "bubble" on the real estate market, the CBA said.
The model includes supply and demand affecting the prices on the property market. According to these factors.
The level of prices on primary and secondary markets was assessed to determine the level of inflated prices on the real estate market in Azerbaijan.
Econometric tests and calculations carried out by CBA showed that the population's real income, and loans for real estate, are a factor of demand for both real estate markets.
Analyses show that there is no interdependent relationship between the level of prices and term of exposure on the primary real estate market.
Specialists of the Central Bank estimated the equilibrium level on the primary market for the supply and demand, only demand - on the secondary market based on the IMF methodology. Then, the equilibrium level was calculated on the primary market on the basis of pricing factors using the final result. The obtained result allows to determine the level of "bubble" of real estate and see the risks that may arise during its reduction.