EconomicalHousing

Decrease in housing production statistics/retirement of builders, did the price increase?


Elham Samadzadeh/ According to Tejarat News, in a situation where housing prices have increased dramatically, statistics indicate a 20% drop in construction in the country.

Although the price increase in the housing market is lower than the inflation rate, even now, buying it has become a dream for some sections of the society. In some cities, the price of buying a house has increased 3000 times during the last 16 years.

Effective factors in housing prices

Housing prices are determined under the influence of various factors, which include production, the relationship between supply and demand, the behavior of real estate investors, and similar cases.

Therefore, according to the published statistics, in a situation where housing production in the country is facing a 20% decrease, the prices are increasing uncontrollably. However, some real estate experts believe that the price of residential properties will not be higher than this and that the brakes on the increase will be pulled soon.

Even if this statement is correct, the fact is that in the current situation, consumer applicants have withdrawn from the market and the demand has decreased to a great extent.

The role of reduced construction in increasing prices

According to official statistics, there is a need to build 900,000 houses in the country every year. The floor of this requirement is the construction of 560,000 houses per year. While every month on average, only about 47 thousand residential units are built in the country.

The difference between these statistics shows that the housing market has not been able to produce the required number of houses. This process has a significant impact on the price and locking of transactions.

The decrease in attractiveness of investment in the field of construction has become an important factor for mass builders to withdraw from this market. These days, we are witnessing the migration of investors from the housing market to parallel markets or construction markets in other countries. The continuation of this trend can give a fatal blow to the country’s construction market.

Does recession moderate prices?

In the meantime, according to the published official statistics, since the beginning of this year, there has been a deep recession in housing transactions. This process can play a significant role in stabilizing or reducing housing prices.

Of course, many sellers have withdrawn from the market in order to incur less losses on trades. Many of them prefer to witness this market from afar in the current state of real estate transactions.

Review of transactions in Tir

According to the official statistics published in July this year, the monthly price growth rate in the capital’s housing market has dropped from 8% to 6%. In the meantime, some experts believe that this drop is more due to field reports of sluggish transactions compared to the previous month.

Based on the data of Keylid system, the monthly growth rate of the proposed housing rates in Tehran city has reached 6% in July from 10% in June. This figure shows a drop of 2 percentage points compared to the 8% price increase in definitive transactions. In fact, despite the price increase, the rate of inflation in the Tehran housing market has decreased by 40%.

The percentage of changes in the proposed price per square meter of Tehran housing in real estate ads weighted by regions based on the number of definite transactions indicates that the average price has reached 43.1 million tomans from 40.5 million tomans per meter in June.

Housing inflation lagged behind general inflation

It is obvious that the housing market in the country has been accompanied by many fluctuations in recent months, but in general housing inflation is lower than general inflation. Because according to the published statistics, housing inflation is behind the general inflation by 12% and 22%, respectively, in both point-to-point and annual inflation indices.

This issue, in fact, shows a decrease in real prices, as opposed to an increase in nominal prices. Therefore, it is expected that the price in the housing market will be lower than the inflation rate by the end of this year.

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