Housing Market in Recovery Mode
EghtesadOnline: The housing market throughout the country is slowly but steadily turning a corner after years of recession in a nod to an earlier recovery in capital Tehran, a report by the Ministry of Roads and Urban Development reveals.
The report, which is the first to detect a nationwide momentum in the key housing industry, indicates that the rest of the country is also on the verge of a "pre-boom" stage.
"After recessionary conditions worsened in the previous fiscal year, real-estate residential deals began to bounce back with the advent of the New Iranian Year (on March 21)–which had already occurred in Tehran a year earlier," says the report published on the official news website of the ministry.
The report, citing official statistics released by the ministry’s Housing Economics Office and the Tenement Management Information System, states that in terms of volume of deals and average prices, the Iranian housing market entered a pre-boom phase as of March 21, according to Financial Tribune.
Based on the analysis of the head of the National Association of Realtors and estimates by other realtors in provincial capitals, the report adds that the turnaround has happened “in spite of a deepening recession in the last fiscal year in the nationwide housing market”.
As an example, the report notes that during the second Iranian month of the previous fiscal (April 20-May 21, 2016), a total of 60,000 home sales were recorded but the volume has jumped to 100,000 this year.
“Based on the behavior of the housing market in boom and bust cycles, experts believe that one of the telltale signs of a nationwide housing recovery is the volume of overall sales reaching and surpassing 100,000,” the report adds.
However, the fact that the markets of Tehran and other provinces have aligned indicates a significant break from last year.
Last year, the volume of home sales in Tehran reportedly experienced a 5% rise while average house prices fluctuated by roughly the same amount.
That is while on the nationwide scale–which encompasses 31 provinces–the volume of sales decreased by a hefty 40% even though average home prices went up by 17%.
As claimed in the MRUD report, housing experts believe that Tehran’s housing market has entered a pre-boom phase and in line with the usual trend in which markets of other cities follow suit with a delay of one or two seasons, “the depth of recession in those cities will decline and they will also move toward the pre-boom phase”.
Home prices released by the Housing Economics Office indicate that the current average national home price of 20 million rials ($533) per square meter has registered a 15% increase over the one-year period, the report revealed.
Statistics also show that Tehran was among cities with the smallest price hike in the last fiscal year while compared to Tehran Province, 22 provinces registered “significantly higher” price fluctuations.
However,13 other major cities, namely Qom, Karaj and Bandar Abbas, registered price rises in the single-digits during the same period along with Tehran.
The report also includes a section that shows how home loans extended by the agent lender of the sector, Bank Maskan, have increased affordability.
It indicates that 700-million-rial ($18,600) loans allow Tehran citizens on average to buy 17 square meters of residential units while residents of Semnan will be able to purchase 51 square meters with the same amount of loans.
On average, the loans allow Iranians to buy 35 square meters.