By Abdul Kerimkhanov
Nearly a million Armenians live below the poverty line, which is about a third of the country's population. For more than two decades, the successive authorities promise to fight poverty, but they still fail. After the velvet revolution, the new government of Armenia headed by Nikol Pashinyan promised the same, whilst things are right where they started.
Against this background, Real Estate Cadaster Committee of Armenia has prepared a bill providing for mechanisms to bring the cadastral valuation of real estate to real prices on the market. This means that the cadastral price of real estate in the near future will increase significantly in Armenia.
It is yet difficult to predict how this will affect the situation on the market. Most likely, it is possible to expect hype and a temporary jump in prices. This area is usually very sensitive not only to more or less significant events, but even to rumors and forecasts.
As in other areas, after a while, the excitement will subside and the pricing process will return to the standard formula of pricing based on supply and demand. Here prices are directly related to the socio-economic condition of the country, the investment climate in its economy, security issues and demographic trends.
However, to date, there are practically no positive signs in these areas in Armenia. The investment climate is becoming less attractive, the country's economy is crumbling, the total reduction of jobs increases the unemployment rate, migration and capital outflow increase, Nagorno-Karabakh tensions increase and also there is a threat of a military action. In short, the motivation for the revival of the real estate market in Armenia, the prospects for its activation seem vague.
Increase in the cadastral value of real estate in Armenia will inevitably lead to an increase in the tax on real estate, which, in fact, is not hidden by the country’s authorities. This is another painful blow to the citizens’ social condition.
Although, the actual amount of real estate taxation applied today is minimal and not quite adequate, it is impossible to ignore the social status of property owners, which is the vast majority of citizens. In a country where one-third of the population is officially poor and almost the entire population owns real estate, the government intends to increase this type of tax. This is a very severe and cruel step.
According to the National Statistical Service of Armenia, the average monthly salary in 2018 was 172,000 drams ($360). Meanwhile, in 2017 this figure was recorded at the level of 177,000 ($370). That is, over the year, the average monthly salary decreased by 5,000 drams, which indicates negative trends in terms of quality of life in the country.
It is also important to pay attention to another circumstance. Armenian PM periodically declares that due to changes in the funded pension system since July 2018, salaries of 209,000 citizens have increased. However, the reduction in the amount of payments to the pension fund does not mean an increase in wages. This is a reduction in costs, not an increase in income. The question is that even taking into account the "growth of salaries of 209,000 people" declared by the head of the Armenian government, the average monthly salary decreased by 5,000 drams. So, this is a trend.
Thus, having such a sad social picture, not having distinct promising programs for a tangible change in the situation, the Armenian government is raising the property tax, which will affect the interests of every citizen of Armenia, whether it is a villager or an apartment owner in the city.