Georgia reveals decline in apartment sales for June 2020
BAKU, Azerbaijan, August 1
By Tamilla Mammadova – Trend:
Mortgage issuance was driven by sharply declining foreign exchange (FX) interest rates in the first quarter of 2020 in Georgia, Trend reports via Georgian investment company Galt&Taggart.
This trend was reversed due to COVID-19, with markets pricing in increased risks. Lari interest rates stood at 12.8 percent and FX interest rates at 6 percent in June 2020.
Issuance of new mortgages was down to 19 million lari ($6.1 million) in April 2020 year-on-year and to 40 million ($12.9 million) in May 2020, but reduction slowed in June 2020 with 164 million lari ($53.07 million) issuance.
"We expect sharp spike in the mortgage issuance in second half of 2020, as government’s 4 percent interest rate subsidy scheme will incentivize customers to buy apartments on the primary market. This subsidy program will last till end 2020 and mortgages for new apartments sold by developers with the maximum value of mortgages up to 200,000 lari ($64,724) will be subsidized during five years by the state," the report said.
Apartment sales contracted sharply in April (-92.7 percent year-on-year) and May (-74.3 percent year-on-year) due to COVID-19 and related lockdown measures. However, decline in sales slowed to 21 percent year-on-year in June, highlighting first sign of recovery.
Notably, sales decline was higher in new apartment category as market was waiting for 4 percent mortgage interest rate subsidy scheme for new apartments, which became effective from July 2020.
Suburban districts continued to dominate sales in the second quarter of 2020, despite suburban customer base being most sensitive to economic fluctuations. Out of the top 5 districts by sales, the 4 suburban areas, including Gldani, Samgori, Isani, Didi Dighomi accounted for 54.2 percent of total residential sales in second half of 2020.
"We expect that mortgage subsidies and weakened purchasing power of consumers to further lift share of suburban sales in the nearest future, as only mortgages up to 200,000 lari ($64,724) are subsidized by the government before the end of 2020," the report said.
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