Interviewed by Siranush Simonyan
Photos by Lusi Sargsyan
Down payment will remain a mandatory condition for the “Affordable Housing for Young Families” Program
The Government of the Republic of Armenia recently approved the draft for making amendments to the “Affordable Housing for Young Families” Program by which it clarified the terms and conditions for obtaining apartments.

Mr. Karamyan, why did the government make the amendments?

Arsen Karamyan: There was a plan to make amendments to the “Affordable Housing for Young Families” Program in the final period of activity of the former government two years ago. At the time, the results of the monitoring that our ministry had conducted clearly showed that there are certain problems that need to be solved. Nevertheless, for some reasons, those amendments were made just recently.

Based on our studies, over the past couple of years, the threshold of the age of marriage in Armenia has increased. Whereas the age of marriage was considered 25-26 ten years ago, now it is 29. However, according to our program, the total sum of the age of young couples shouldn’t have exceeded 60, meaning they couldn’t benefit from the program by getting married at the age of 29 or 30. Such programs can’t be short-lived. So, we decided to increase the threshold of the total sum to 65.

Our second amendment was the increase in the permissible high threshold for the cost of an apartment. The study on the current prices in the real estate market and the responses from several beneficiaries, who said that it was impossible to obtain a more or less normal apartment for the previously set price of AMD 16 million, compelled us to reconsider the threshold for the cost and make it AMD 25 million.

At the same time, there has also been a small change made for the down payment. From now on, if the cost of property is within the AMD 18 million range, the beneficiary can make a 10% down payment instead of a 30% down payment by way of a pledge for a secondary mortgage. With this, we are trying to make it easy for people who have problems with making the down payment.

What are your expectations from the amendments?

A. K.: We hope to see some progress in the real estate market. Frankly, the recent growth shows that there is less property that is obtained through the program. This was mainly due to incompatibility of the current conditions with people’s expectations and opportunities.

We have made an attempt to make the program more accessible for the wide layers of society, that is, for people who need an apartment, but are not part of the program for objective reasons.

What’s more, our ministry is committed to conducting periodic studies in the market to identify the problems that are general, the solution to which will significantly raise the level of effectiveness of the program.

How is the supply and demand? Has the passivity trend in the general real estate market extended to the program?

A. K.: There is truly passivity in the real estate market recently, but this doesn’t extend to such target programs. These programs are clearly addressed and suitable. So, there is usually no decline in the demand for them. On the contrary, our studies have shown that there are more young families planning on obtaining apartments.

As far as the passivity of the general market is concerned, I believe this is due to the fact that people are waiting for something and are very uncertain about the future. The real estate market is quite sensitive to economic ups-and-downs. So, the current situation is fully in line with our economic indicators.

Mr. Karamyan, this program has been around for a long time now. How would you assess its effectiveness?

A. K.: I think the results are good. If we take a look back and see that many families that have solved their housing problems through this program, we can only say that this program has served its goal.

Through the “Affordable Housing for Young Families” state target program, nearly 2,500 families have been provided with the opportunity to obtain a home.

The government is also carrying out the “Affordable Housing for Young Professionals” Program. How would you assess the effectiveness of that program?

A. K.: The “Affordable Housing for Young Professionals” Program was launched in 2007 and is being held under the patronage of the President of the Republic of Armenia. Unlike the other program, which only envisages financing, here we are dealing with the application of two tools. On the one hand, young professionals are offered an affordable financial resource, and on the other hand, they are offered a price that is close to the original price of an apartment. This means that a young professional has the opportunity to obtain an apartment at a price that is affordable and lower than the market price. The combination of these two components will lead to a much better outcome. 

The beneficiary obtains an apartment from the primary market where the description of the property exceeds the quality of the secondary market. Nearly 2,000 apartments have been granted for exploitation through this program, and there are nearly 500 young families on the list that are waiting for their applications to be approved. 

We hope some steps are taken to start construction in the next six months.

As far as the qualitative elements of apartments are concerned, I can announce that the quality is above average. We have already exploited 5-6-year-old buildings, the quality of which has passed the test of time.

What is the ratio between people of Yerevan and those of the provinces benefiting from the “Affordable Housing for Young Families” Program?

A. K.: I must say that Yerevan stands out with a certain advantage due to the fact that a large portion of the population of the Republic of Armenia is centralized in Yerevan. In addition, it is no secret that the level of creditworthiness is higher in Yerevan than in the provinces.

Nevertheless, we have mitigated that difference to a certain extent, making the amount of subsidization 4% in the provinces when it is 2% in Yerevan. 

Recently there were rumors about eliminating the down payment entirely. In your opinion, how realistic is that?

A. K.: I think we need to refrain from making statements about elimination of the down payment program, especially since there are no possibilities for that. Moreover, people don’t make a down payment just because they have a lack of financial resources. It is first and foremost the beneficiary’s responsibility.

I don’t know any country where there is a 0 percent down payment for a mortgage. There is at least a 4-10% down payment even the United States of America where one can predict the economic situation for 20-25 years.

The easiest thing to do is to make statements that one would like to hear, but we must not forget that those statements need to be based on calculations. It’s just that people shouldn’t let people have certain expectations and then try to explain why those expectations weren’t met. It is our duty to be honest and say what we can turn into a reality. As a person with some experience in this field, I don’t think the possibility of a down payment is unrealistic.

The several discussions with representatives of Armenia’s banking sector have served as a basis for my conviction. During those discussions, we have indicated that we can lower the down payment, but not eliminate it. This is not only wrong and inappropriate, but also there are no financial grounds for that.

Some beneficiaries complain that restrictions on amounts don’t let them obtain the apartment of their choice. How would you interpret that?

A. K.: The “Affordable Housing for Young Families” state target program is merely a social program. It is not mandatory for this program to extend to the beneficiaries who wish to purchase an apartment in central Yerevan and seek appropriate funding. I think AMD 25 million is more than enough to obtain an apartment with accommodations that are more than average.

Some ask why the program is for obtaining apartments and not construction of homes. What do you have to say about this?

A. K.: Of course, there is a problem with that, but in terms of scale and quantity, it is not that big of a problem for the government to try to solve it with a differentiated decision. They are separate cases that don’t have a general description. That is why there is still no coordinated approach for the solution to this problem.

Mr. Karamyan, how do you think the next amendments will be?

A. K.: It is hard to say. Time will tell. Any amendment needs to derive from the problems that exist at that moment. So, it is impossible to predetermine. The latest amendments were made recently, and I think there needs to be an interval of one to one-and-a-half years.