EghtesadOnline: While it could be a time-consuming process, the stagnating housing sector is on track to reenter a period of growth without stoking inflation, the deputy for economic affairs at the Central Bank of Iran said.
"Due to the unprincipled policies of the past, the housing sector has become imbalanced and its return to normalcy will take quite a while," Peyman Qorbani also told IBENA.
The official underscored the necessity of conducting feasible reviews in each city and district to determine whether the problem relates to supply or demand in that specific area in order to arrive at correct policies.
"In spite of everything, the procedure of recent years has been to bring about a boom into the housing sector without a hike in prices."
According to Financial Tribune, Qorbani noted that while data from the previous fiscal year (ended March 20, 2017) indicate that housing sector growth in Tehran has been negative, building approvals throughout the country have been on the rise and shows that investments are increasing.
On the other hand, price growth and the number of home sales were negative two years ago, while both were positive last year.
Late January, the research arm of the Iranian Parliament revealed that the negative growth in the property market will persist up to the end of the last fiscal year that ended in March.
The report by Majlis Research Center cited that a look at statistics released by CBI and the Statistical Center of Iran indicate that the housing sector slipped into recession from March 20, 2012, and has been experiencing negative growth rates ever since.
"The housing sector's stagnation has turned into a five-year recession," it added.
Qorbani claimed that "housing sector growth has become positive", but is not as strong as it should be. This has prompted CBI and the banking system to make plans with broad targets to maximize support for the ailing sector.
Open to Suggestions
Qorbani pointed out that the sector will not be energized only through loans, because a variety of other measures, including improving the country's business climate, easing issuance of construction permits and incentives from municipalities and other related organizations play a complementary role.
Welcoming any suggestions put forth by the Ministry of Roads and Urban Development requiring funds, the official said, "A positive future awaits the housing sector as attested by policymaking circles and people active in the sector."
The Money and Credit Council, a decision-making body, last week voted to raise the limit of no-deposit home loans for couples to increase home ownership among the youth. The limit for such loans for couples is now 1.2 billion rials ($32,000) in the capital Tehran, which stood at 1 billion rials ($26,600) prior to the ruling.
MCC has also allowed Cooperatives Development Bank to offer housing loans, which used to be the prerogative of Bank Maskan and other non-specialized commercial banks. The final implementation of the measure depends on banks’ resources.
As to other facilities offered during the past few years to lift the housing sector and promote home ownership, Qorbani referred to Housing Savings Account as a prime example.
HSA is a scheme devised to promote home ownership for first-time buyers and requires applicants to make an initial deposit and wait for a year to be eligible for the loan. In Tehran and other big and small cities, the amount of loan has been set at 800, 600 and 400 million rials respectively ($25,600, $19,200 and $12,800) with interest rates of 8% and 9.5% for distressed and non-distressed urban areas respectively.
Last week, a board member of Bank Maskan announced that the agent bank of the housing sector has opened more than 163,000 HSAs with an average deposit of 230 million rials ($6,130), with the total deposits amounting to 36 trillion rials ($960 million).