5 reasons for the housing sector to face a historical impasse – Tejaratnews
According to Tejarat News, Hossein Abdo Tabrizi, a senior real estate expert, at the review and opinion meeting of “Economic World” which was held with the topic of examining the market situation, explained the roots and symptoms of the property price bubble in big cities and proposed a general but fundamental solution to the exit The unfavorable situation of this section is now paid.
He is the monetary policymaker’s insistence on pretending about the low rate of bank interest, which causes funds to sit somewhere other than the money market.
Also, money comes from a place like the real estate market for the sole purpose of maintaining value; Moreover, the destructive effects of liquidity poured into this market have been evident especially during the 90s when production and the industry in general suffered serious damage.
Abdo Tabrizi pointed out that between the cryptocurrency, coin, gold and housing markets, the choice of many investors has always been housing due to the risks of the first three options.
Housing bubble in big cities
In the second part of his speech, this economic expert talked about the housing sector’s encounter with a historical impasse and explained its five obvious signs.
First, he discussed the situation of the price-to-rent ratio of housing in Tehran and big cities and said: This ratio has reached 60 in Isfahan and is currently close to 40 in Tehran. The maximum ratio of price to rent in the big cities of the world is often between 20 and 25. The ratio that Abdo mentioned is the same as the famous “bubble gauge” ratio of the housing market, which increases during price jumps and gradually decreases during periods of relative stability in the market.
In fact, this ratio is indicative of two signs of housing impasse; One observes that the time of access to housing, including the rental rate in big cities, has reached several decades, even though it takes 40 years in Tehran and 60 years in Isfahan for a tenant household to become a home owner.
The second sign is the presence of a big bubble in the housing prices of the country’s big cities, which has not been seen before, at least with the current dimensions, and has reached the current point under the influence of the process that took place in the 90s.
The third sign of the impasse faced by the housing sector is the high share of capital purchases in the housing market, which has affected all equations in this market.
Complications of the prevalence of luxury real estate purchases
The fourth sign of the housing impasse, which, according to Abdo Tabrizi, we never faced in the past, but has become a problem today, is that the share of housing in the household’s budget has increased in an unusual way.
Abdoh Tabrizi explained the complicated situation of the housing sector in Iran and said that with the continuation of the current practice, owning a house in big cities like Tehran will become a dream for young people, and it seems that a situation similar to South Korea is prevailing in a place like Tehran. . He also pointed to the lack of land development policy in Iran as one of the reasons for the housing price bubble in big cities.
In the final part of his speech, after presenting a picture of the housing sector, this senior economic expert proposed a general but fundamental and important solution to get out of the current situation and said: The way out of the housing deadlock is the existence of “good law” and ” He is a capable performer. He considered the transaction tax to be a more appropriate choice than the capital gains tax that the government could focus on.
What is happening in the housing market?
Why is money constantly circulating in asset markets (both productive and non-productive)? For two reasons: First, to show off in the money market by insisting on low bank interest rates, even in a situation where the government borrows based on the current rates. Second, the productive sector of the economy cannot provide the returns expected by investors.
One reason for the formation of housing price bubbles in big cities after the large presence of non-consumer applicants in the real estate transfer market is “lack of land development policy”.
With the process that took place especially in the second half of the 90s, owning a house in a place like Tehran is becoming a dream, and it seems that a situation similar to South Korea is prevailing in the capital.
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