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Expensive Housing for the Poor
Markets Review 

2017 May 31 ( Wednesday )  13:31:11
Print version
Русский Azərbaycan

Social Mortgage Has Never Been in Demand among Poor Citizens

Baku / 31.05.17 / Turan: Azerbaijan has already announced registration of applications for the purchase of concessional housing, but nothing is known about the prices for apartments, except for the statement of the head of the State Agency for Housing Construction Samir Nuriyev, two months ago, that the cost of such living space will be 25% below average prices in the real estate market.

There are still no specificities in the issue of the cost of preferential apartments built by the single developer of multi-storey social housing LLC MIDA. It is unclear how the potential buyers will calculate their financial possibilities for filing electronic applications. The editorial staff appealed for an explanation to the expert in real estate Rashad Aliyev, but there was no exhaustive answer. "As far as I know, there is no specific information about prices. However, this is only the beginning of the registration of applications. The process has gone, and Nuriyev's promise that prices will be 25% lower than the average for the market already gives us the basis to take the first step," the interlocutor said.

According to other market experts, social housing will not be cheap, i.e. affordable for poor citizens. "The construction of these projects is thorough, the buildings are built, according to modern standards, and with the use of rather expensive materials and technologies," Elnur Azadov, executive director of the Association of Realtors of Azerbaijan (ARA), told Turan. In Azadov's view, this is far from economy housing and it is difficult to call it budgetary. In general, the expectations of citizens, backed up all this time by statements about the available conditions for the purchase of apartments in houses erected in the framework of this social project, came up against reality. It turned out that the right to a discount will belong to citizens already covered by the social mortgage that was in effect before. For the list of these individuals, as well as the list of the approved documents, please visit the MIDA website at

Earlier it was stated that preferential housing is designed for low-income strata of the population. This concept usually refers to the specific state of material insecurity of people, when the income of a person or family does not allow maintaining consumption socially necessary for life activity. Simply put, we are talking about people who do not have the means to a minimum national consumption standard. The approach to the persons covered by the social mortgage in Azerbaijan is built somewhat differently. Consequently, the system of preferential housing is not relevant to the poor, who do not have the opportunity to buy housing at market prices.

From the conversation with R. Aliyev it was found out that the preferential mortgage is nothing new, except for the expected discount on apartments. "It means the same social mortgage, implying the initial installment of 15% at 4% per annum," the source explained. "Mortgage, in fact, does not have much significance for low-income families, as they still could not use it. According to Hasanov, another important point is connected with the existence of problems in the sphere of lending in general: "Stagnation observed recently in the economy has an extremely negative impact on people's incomes and their ability to pay loans. In this situation, agent banks are forced to take an even more cautious stance."

According to the expert, mortgage loans will be issued under the old scheme through the Azerbaijan Mortgage Fund OJSC, which works with authorized commercial banks. Banks, at their own discretion, increased their initial mortgage payments by 2.5-3 times, which immediately cast doubt on the possibility of obtaining housing through public funds. According to Aliyev, the legislation has changed, and now loans for the purchase of housing will be issued on the basis of primary rights to collateral. "And if earlier an apartment purchased on mortgage in a new building could not be considered a subject of pledge because of the absence of a deed of purchase, today this problem is solved," the expert said. However, it is unlikely to help low-income families. -0---