Rental prices drop in Yerevan as real estate market stabilizes
Rent prices drop in Yerevan
After a sharp surge in rental prices in 2022, Armenia is now seeing a significant decline. The decrease began in mid-2023 and became more pronounced in 2024, with rental rates dropping by approximately 30%. Realtors attribute the initial spike to the temporary influx of Russians into Armenia due to the Russia-Ukraine war, which created increased demand and drove prices up, in some cases doubling.
As many of the newcomers gradually left Armenia, the market adjusted again. A “tenant shortage” has now emerged, particularly for high-end properties with monthly rents ranging from $1,000 to $3,000.
Other factors have also contributed to the decline in rental prices. For example, the number of available properties in towns near Yerevan has increased. Realtors believe this trend will persist in the coming years.
Interestingly, rental rates might have fallen sooner if not for the arrival of more than 100,000 Karabakh Armenians in Armenia. After the departure of Russian expatriates, there was significant demand from these refugees, particularly in Yerevan, as they sought proximity to jobs and social services. However, unlike foreign tenants, they primarily rented more affordable homes and apartments.
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How rising rent affected one family
Susan has been renting apartments for eight years. She moved to Yerevan from Kapan to ensure her children received a quality education. Over the years, the family has had to move several times due to landlords raising the rent unexpectedly.
“Initially, we rented an apartment in Yerevan for 60,000 drams per month [$153 at today’s rate]. But every year, the landlord increased the rent by 10,000 drams [$25], explaining that the apartment’s proximity to the metro made it attractive to students from the regions,” Susan recounts.
By 2020, the rent for this apartment had risen by 40,000 drams ($100), forcing the family to search for a more affordable place on the outskirts of Yerevan. However, they couldn’t find a suitable apartment and had to move to Abovyan. There, they rented a three-bedroom apartment with a private heating system for 80,000 drams ($200).
“We were very happy with the conditions. But in 2022, when Russians arrived in Armenia, the rent for this apartment doubled. We offered the landlord a long-term contract for 120,000 drams [$300], but he declined,” Susan explains.
For a year, the family of four was forced to live in a single room in a dormitory, paying 100,000 drams ($250) per month.
“Although both my husband and I worked, along with paying for the children’s education, we couldn’t afford to spend more on rent,” Susan recalls.
In August last year, the landlord of the three-bedroom apartment in Abovyan offered to rent it out long-term for 120,000 drams.
“We immediately signed a two-year contract. Now we live in this comfortable apartment and know the price won’t change. A similar apartment a few floors above was recently rented out for 150,000 drams [$380],” she says.
Next year, the family plans to buy an apartment in one of the newly constructed buildings in Abovyan.
“We don’t want to live in rented apartments anymore. The children have graduated from university and started working. It’s time to fulfill our long-held dream. All four of us are earning. Our eldest daughter is saving for the down payment. We’ll also benefit from the income tax refund on mortgage payments until 2027. We need to take advantage of this opportunity,” Susan shares her plans.
Market self-regulation
The high demand and rising rent prices prompted many property owners who had never considered renting out their homes to take advantage of the “favorable circumstances” in 2022. This observation was shared by Andranik Arutyunov, founder of Silver REA Real Estate and a member of Armenia’s Association of Real Estate Agencies.
Commenting on the market, Arutyunov emphasized that the recent price decline is not a downturn but rather a result of market stabilization. He also noted that the rise in rent prices boosted activity in the secondary housing market:
“People with savings were purchasing properties on the secondary market to rent them out. Currently, properties in the $300–$500 range are the most in demand, which reflects the income levels of the population.”
Arutyunov predicts the market will stabilize fully soon, but he does not expect further significant price drops.
Realtor Ashot Amirkhanyan described 2024 as a challenging year for the real estate market but noted that prices have now settled at realistic levels. He observed that there are many listings, but demand is relatively low. One reason for this is that many renters have purchased homes.
“Now, the market will only see spikes during peak tourist months. Hotel rooms in Armenia are very expensive, so many foreigners prefer short-term apartment rentals,” said Amirkhanyan.
He predicts that rental apartments in the price range of up to 200,000 drams ($500) will remain in demand. Additionally, centrally located Yerevan apartments with monthly rents of $1,000–$1,200 and properties for short-term rentals will attract interest.
For those with a monthly rental budget of 100,000 drams ($250) or less, housing will likely need to be found in nearby cities such as Etchmiadzin, Abovyan, Masis, Artashat, or Ashtarak.
Paying income tax on rental properties is mandatory
The State Revenue Committee regularly reminds property owners that renting out a property requires the payment of income tax amounting to 10% of the rental income. Additionally, landlords must either sign a state-registered lease agreement or submit a rental declaration to the tax authority.
Failure to comply with these requirements will result in a fine. The penalty is 5% of the market value of the property, capped at 500,000 drams ($1,270).
