Armenia is facing one of the highest mortgage rates in the region—15% for a 20-year fixed-rate mortgage. This high rate creates significant barriers to homeownership, especially without the possibility of income tax refunds on mortgage loans, according to Agasi Tavadyan, the author of the project tvyal.com, in an interview with BMG.
"For comparison, countries like Japan (1.65%), Germany (3.51%), and Spain (3.47%) offer much more favorable conditions for homebuyers. Even neighboring countries like Azerbaijan (9.09%) and Georgia (11.7%) offer more affordable mortgage options," noted Tavadyan.
In addition to high mortgage rates, Tavadyan draws attention to the high cost of living in Armenia. He refers to the Numbeo cost of living index, which compares prices of consumer goods, restaurants, transportation, and utilities (excluding rent).
"In this analysis, we normalized the index relative to Armenia (set at 100%) and compared it with other countries. The results are concerning in terms of Armenia’s economic competitiveness," Tavadyan explains.
He notes that all neighboring countries have a lower cost of living compared to Armenia:
- Iran: 60.4% of Armenia’s cost of living
- Russia: 71.6%
- Kazakhstan: 71.8%
- Azerbaijan: 74.2%
- Georgia: 79.8%
"These data raise several questions about Armenia’s economic competitiveness," says Tavadyan.
"First, how competitive is the Armenian workforce compared to the labor force in other countries in the region, given the high wages and cost of living? Second, how does this situation affect Armenia’s attractiveness as an investment destination? Will foreign investors prefer to invest in Armenia, given the relatively high labor costs, or will they choose neighboring countries with lower wages?
The high cost of living in Armenia, combined with a relatively low wage-to-expense ratio, creates serious challenges for economic growth and improving the quality of life. This situation particularly affects middle- and low-income citizens, who are forced to allocate a large portion of their income to meet basic needs," emphasizes economist Tavadyan.
