Housing problems through the eyes of young people

Of the three main interconnected issues facing young people in Armenia: education, work, housing, the housing issue deserves special attention. It becomes especially relevant when young people are preparing to start a family. The only opportunity for them to get a mortgage is to get them into the financial system, which means that they will be captive to the financial system for the next 20-30 years, and only if they have a stable income. Even realizing that the longer a mortgage loan is, the more money you will have to pay – sometimes even double the price of an apartment to buy – does not hold back potential beneficiaries because the apartment is a necessity and there is no other way.

According to statistics, within the framework of the Affordable Housing for Young Families program launched 9 years ago, as of December 2018, nearly 4,000 loans have been issued through banks, the total contracted amount of which exceeded 30 billion AMD. Half of the loans are in the regions. This is, let’s just say, lending statistics within just one program.

If we talk about what the state is doing to ease this burden, it should be noted that almost all the governments of Armenia have tried to solve this problem. It is another question of how visible and tangible it is to the stakeholders. For example, in 2016 the Ministry of Labor and Social Affairs of the Republic of Armenia developed a 2016-2018 demographic improvement  national program, which also included provisions for the introduction and implementation of a social housing fund. In particular, the authors noted that by investing 1 billion AMD over 30 years, the Republic of Armenia can address the issue of families with housing problems in the country. And if the annual investment makes 1 billion AMD, it will be possible to solve the problem of 1900 families.

However, the government changed in 2017 and the issue remains in the air, though the new, incumbent authorities also make efforts, for example, this spring the government approved the same draft amendments and supplements to the state’s Affordable Housing for Young Families program.  First, the age threshold requirements changed, with each spouse’s limit of up to 35 years removed and now only the age limit of 70 years remains.

The proposed changes also provided the beneficiaries of the project an opportunity to purchase an apartment at a 7.5% interest rate instead of the previous 9.5%. The down payment will make at least 7.5% of the apartment value and the repayment period will be extended to 30 years. The value of the acquired apartment also increased to 30 million AMD.

As in many cases, getting a mortgage is not always in line with our idea of going to a bank, signing a contract, and ending it. It’s a long, complicated process that is also told by 29-year-old Anna, a WomanNet.am interviewee, who says there is no other way out –  if you want to get an apartment, you have to be prepared for all the hardships, both visible and hidden.

Let’s not forget that no matter how difficult it is to get an apartment, it is no less difficult to furnish it so that you can live in that desirable property…

In any case, it is fair to argue that getting a mortgage and especially providing a down payment for all young people is not achievable given the average salary in the country and youth unemployment rates. And that is why in 2016, the government began discussing another plan to eliminate the down payment. While many did not believe this initiative, and the banking system was stubbornly opposed, this option was seriously debated and even publicized in the framework of the aforementioned National Program for the Improvement of Demographic Situation 2016-2018. But under the next Karen Karapetyan cabinet, this housing initiative has been frozen, and so far remains only one of the good wishes, though we think it deserves some attention in the new government.