Housing prices in Iran’s metropolises have risen sharply, and in recent months, due to the collapse of all monetary and commodity markets, it has become a safe haven for certain large capitals, which, thanks to reduced oversight and sometimes wrong policies, have taken a safe path for Has provided macro capitalists. Unfortunately, the housing market for a large part of the Iranian population promises difficult days in the life of tenants and tenants. In the following, we will discuss the latest developments in the housing market. Please be with Artan Press.
The stock market, currency and gold paved the way for housing transactions. Housing transactions in the first 10 months of this year have grown by up to 2% compared to the same period last year, this growth unfortunately did not end in favor of tenants and only tightened the conditions for them. Unfortunately, inflation in the housing sector has always grown throughout the year, regardless of the factors influencing parallel markets such as the stock market, gold and foreign exchange, and has put the housing bubble in its current state at its greatest.
**** Increasing demand for housing
Demand for housing is always high in the country. Because a large part of the population of Iran is young people and about 13 million young people in the country are of marriageable age and forming a life, and this makes the demand for housing in the country always Be growing. Therefore, in the rental sector, from the beginning of April to the last day of January, 964,057 leases have been concluded in the whole country, which shows a growth of 92% compared to the same time in 1398.
This volume of rental demand growth is not a good indicator and analysts should examine it with the realities of society. This means that there is potential demand in the housing market that is not purchasing power and has entered the rental market. When there is no affordability and housing prices are rising day by day and the homeowner’s greed for more rents is increasing, we are witnessing a class divide in the society and population growth on the outskirts of the city, which has many political, economic and social consequences. Comes with.
*** Why is the housing market so complicated?
But why is the housing market so complicated? Why should the rental rate in the country’s metropolises go up unbridled? The biggest damage that our people see in the field of housing comes from the merger of the ministries related to housing.
In other words, the biggest mistake in merging the Ministries of Roads and Urban Development can be attributed. In other words, we merged the former Ministry of Roads and Transportation and the former Ministry of Housing, and the new born, which is the “Ministry of Roads and Urban Development”, unfortunately failed to meet the high goals of the constitution To realize Iranian culture.
One of the most important factors that can depict the very large housing price bubble in Iranian metropolises is the issue of land share of the total property price in large Iranian cities such as Tehran, Mashhad and Isfahan. The share of land in the cost of housing in Tehran is 66% and in the cities of the country is 55%. This shows that the pricing formula for housing, taking into account all the shortcomings, contains at least 30% of the price bubble in the property, which in Tehran can be reduced to 40%. But the wrong mechanisms in policy Are not allowed to evacuate the housing bubble.
*** ۳۹% increase in property prices this summer
Also, by the end of the summer of this year, the price of one square meter of residential land in some areas of the northern half of Tehran has even approached 80 million Tomans, and its average in the whole city has been close to 35 million Tomans. The importance of these numbers becomes clearer when, according to statistics, in the summer of this year, while the number of residential units listed in building permits (as an indicator of new construction) in the whole country increased by 39%, but at the same time, the number of new residential units in Tehran grew Has experienced a negative 5%.
It seems that the sharp rise in housing prices has been one of the main reasons for the decline in new construction, mainly in Tehran. Accordingly, its most important input in housing policy cannot be ignored. Statistics show that the share of housing in the household expenditure basket is increasing, reaching an average of 40% in urban areas. This share is a larger number for lower income deciles. These statements mean that households have to spend a larger share of their income than before to provide housing, and as a result, the share of other expenses such as food, health and education gradually decreases.
*** Home ownership rates are declining
Unfortunately, the government’s policies and passivity and failure to address the issue of housing pricing have caused more people to struggle with the problem of rent every day than the day before. Therefore, the rate of home ownership is declining and less and less families will be able to buy a house. Household purchasing power has declined, and at least four low-income deciles, even with all their savings, will not be able to buy a home for the rest of their lives.
The share of credit in total home equity financing is very small compared to most countries, and buying a home for households relies heavily on household savings. The bulk of the country’s dilapidated structures cannot be renovated due to the inability of households and the lack of an adequate financing and support system.
Let’s not forget that the Mehr housing project led to a 100% growth in the monetary base and the transfer of inflation to future years. The plans that are currently being proposed in the government and the parliament are not much different from the previous plans in terms of inflationary effects. There is no doubt that the National Housing Plan needs a long-term view At the highest level of government, all policy elements should be implemented by accepting the commitment. Such a plan is vital for the country and should never be a tool for politicians.
*** The cost of building a house in Iran is high
The cost of housing in Iran is high and the construction period is long and the technologies are low. This has lowered the profitability and efficiency of production and increased the cost to the household. It is necessary to first outsource some of the large housing projects to large transnational contractors and at the same time provide the ground for the formation of large domestic companies. Also, the field of housing construction is a good arena for knowledge-based companies.
It is likely that stray capital in society will move to the stock market, and we will practically see continued growth in the stock market. If this hypothesis is correct, it is likely that the downward trend in housing prices in Iran will continue at a faster pace. Another issue is the return on investment. The return on the stock market fell by 50% in November. In the foreign exchange market, prices fell by 9% and the coin market fell by 17%. Therefore, in the current stock market, the most suitable place to hold capital. The return on investment in the housing sector is expected to reach negative 20% in the next 6 months.
Housing is usually one of the investments that its ups and downs are slow and gradual. Usually I do not see immediate changes in real estate transactions. But usually any trend that occurs in the market will remain the main approach of the market for a long time and it will take at least six months for this trend to change. We will most likely see prices fall in at least six months.
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