Has buying and selling housing stagnated? / Labyrinth of housing supply and demand in Iran – Tejaratnews

According to Tejarat News, inflation and high prices have affected the housing market in a destructive way this year. Now, as much as the construction is no longer profitable for the mass builders, the people no longer have the ability to buy housing.

With the beginning of the trading season, some believe that the buying and selling has flowed under the influence of capital demand in the market, while others believe in stagnation in this productive market.

Recession in the housing market

Mahmoud Olad, an expert in housing economics, told Tejarat News: If recession means stagnation in construction, then yes, this case exists now; But if it is a matter of buying and selling, it is different from production, and more transactions mean a change of ownership.

He continued: Of course, due to several years of stagnation in construction, the volume of transactions has also decreased compared to previous years.

Limited supply of land

This housing economics expert also said about the limitation in the supply of land: Now in the housing market, on the one hand, we have a limitation on the supply of land and housing, and on the other hand, there is an accumulated demand; However, if we examine it in the long term, this accumulated demand does not become an effective demand, and if the condition of the people improves and economic growth occurs, it is possible that the demand will be stimulated more and the price increase will be more severe.

He continued: However, we will have a price increase at least to the extent that the purchasing power of the existing buildings is maintained, maybe more, that is, to a certain extent, more than the normal inflation.

Factors affecting the housing market

Regarding the current factors affecting the housing market, Olad said: Among the most important factors affecting the housing market, one can consider the limited economic growth and the decrease in people’s purchasing power. In my opinion, this situation has become dangerous.

He explained about this: the risk of reducing people’s purchasing power is because if some purchasing power increases and the conditions improve, it will increase the demand, but the supply will not increase and will cause explosive price growth.

This housing economics expert also stated: Unfortunately, we have lost the golden years and have reached a point where such crises may occur.

The urbanization crisis is another obstacle for the housing market

Olad also explained about the urban development crisis in the country: there is also a crisis in the urban development sector, which actually limits the supply of land. Contrary to the idea that there is a lot of land, there is no land, and whoever applies for construction, has a lot of preparation costs and there are problems with electricity, water and its infrastructure.

He continued: The infrastructure has become very difficult and now there are obstacles in the supply of water, electricity and gas for the existing units. New houses that have their place.

This housing economics expert stated: All the mentioned things mean that the supply side is facing problems and the demand side is also increasing; But now it is suppressed due to people’s purchasing power. If there is an improvement in this repression, the situation will go to a worse side.

Experts believe that untying the knot of the housing market does not lie only in this area. As long as macroeconomic problems and inflation continue, prices will continue to rise in the housing market.

Even if the current situation improves, inflation is controlled and the dollar price stabilizes, it will still take a lot of time to heal the wounds that have been inflicted on the housing market in Iran.

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