Does the slow and steady impact of the dollar on the housing market / property price growth continue? – Tejarat News
According to Tejarat News, there is a traditional belief that the price of the dollar and the housing market are closely related. In this way, with the increase in the price of the dollar, the price of housing is also on the upward path.
Since May 2017, with the withdrawal of the United States from the JCPOA and the unprecedented increase in the exchange rate and the growth in the inflation rate, housing prices have also been on the upward path. But does the dollar have a direct impact on the housing market, and every time the price of this currency increases, it also increases the prices in the housing market?
How does the growth of the dollar make housing more expensive?
In this regard, economist Peyman Molavi told Tejarat News: “If we want to look at this issue cyclically, the first thing that happens when prices rise is inflation; Then this inflation affects the parallel markets and makes them susceptible to growth.
He continued: “This growth in a market like the housing and real estate market – when the real interest rate is negative – has its impact, but this movement is very slow.” “Since the dollar market is under the control of the government and there is pressure on it, it first declines and then stabilizes, and then it jumps.”
Molavi explained about this: “Like in 1997, when the price of the dollar suddenly increased from 4,200 tomans to 18,000 tomans, and after that, the average housing price in Tehran was about 10 million tomans, to 22,500,000 in the following year. Toman arrived. Therefore, the price of the dollar shows its effect on the real estate market in a sharp way, but it happens slowly.”
Which market will receive the dollar signal first?
This economist said about the priority of the impact of the increase in the price of the dollar on the rest of the markets: “The first market that is affected by the increase in the price of the dollar is the commodity markets, which include raw materials, gold and coins, cars and imported goods. The next market that can be mentioned is the stock market and finally the real estate market.
He continued: “The price growth in the real estate market cannot be directly attributed to the dollar price; Rather, housing naturally moves with inflation.” Molloy said: “These two markets have an index called the dollar price of the property, which sends signals of buying and selling and presence in the market.”
Why did housing prices increase?
As mentioned, inflation has a more direct impact on the housing market than other indicators. According to the latest statistics, inflation has reached 48.5% and the average housing price has increased by at least two million tomans in December compared to November.
But observations show that the increase in the price of the dollar has also affected the growth of housing prices. In this regard, inflationary expectations can be considered involved.
The increase in the exchange rate changes the psychological atmosphere in the society, and this is the reason why people declare the price of their property higher than the approved price. Since there is no good monitoring of this happening, this process will increase housing prices in some cases.
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