TODAY.AZ / Business

Buy house with lower price

23 February 2015 [11:36] - TODAY.AZ

/By AzerNews/

By Nigar Orujova

Baku, the city of a non-stop construction boom is now going through some challenges these days, as economy and finance are not stable in the region.

On the face of manat's depreciation, prices are decreasing in the construction sector, which cannot but gladden the residents of the capital city.

Construction materials prices’ lowering is observed since the end of the last year, said Vusal Mastaliyev, expert of the public association "Property Market Participants".

The expert explains that since 20-30 percent of building materials are delivered to Azerbaijan from Russia, a decline of 2-3 percent is observed in the prices of wood, fittings, nails and other building materials produced in Russia.

The main reason is the depreciation of ruble, Mastaliyev believes.

The depreciation of ruble has already affected currencies and markets not only in Russia, but also in other former Soviet states.

"In general, prices of fittings and wooden materials have fallen, which can be explained by the low purchasing power. In addition, most of those who worked in Russia have come back to Azerbaijan, which also affects the price declines," the expert said.

Mastaliyev said if the exchange rate of ruble rises, the price of building materials may get up as well.

However, the price decrease for some construction materials did not affected the price of brick, which is connected with its local production.

The decline in prices of building materials will continue in the coming months, the expert believes, but it will be minimal, no more than two percents.

Reduction of prices of construction materials is expected to stop by mid-year, in summer.

Meanwhile, construction material production is growing in Azerbaijan. Last year, companies engaged in the production of building materials, produced goods worth 458.3 million manat, which is 22.2 percent higher than in 2013.

These productions include cement, cement plaster, ready-mix concrete, asphalt, concrete building construction, processed marble, travertine, alabaster, etc.

Mastaliyev also advised those people who want to purchase a house to hurry up.

Indeed, experts predicts, that real estate prices in the residential sector of Baku could fall by 10 percent in 2015.

Falling prices is also connected with the conflict between Russia and Ukraine. The worsening economic situation in Russia and Ukraine has led to the reduced inflows of money in Azerbaijan. The share of the Russian investments in the local real estate market actually came to nothing.

CEO of consulting company "MBA Group" Nusret Ibragimov said earlier, a decline in activity of the real estate market in Azerbaijan has been noticed in the last three-four months.

"We are observing a price fall for 0.5-1 percent every month. Activity in the market over the past two months fell by 35-38 percent compared with the same period last year," said Ibragimov. The fall of activity will lead to further price decrease.

Ibragimov believes property prices will fall by 8-10 percent during the year.

The same situation is observed at the commercial property market, he added, supposing that prices for commercial properties will fall by about six percent in 2015.

In general, the volume of construction work in Azerbaijan increased last year by 2.3 percent and amounted to 8283.1 million manat in comparison with 2013, according to the State Statistical Committee.

The average cost per square meter in the primary housing market in Baku increased by 18.5 percent and amounted to 1,062 manat (over $1,350) in a year.

The rise in prices in the housing market was 24 percent in 2013.Last year it was 14 percent. However, such prices are beyond the reach of potential buyers, so they were forced to go to the land market.

This market has attracted about half of the buyers. Currently, this segment is observing a gradual increase in the prices. However, this tendency is marked only in the Absheron district of Baku.

URL: http://www.today.az/news/business/138829.html

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