Housing market forecast / invest in real estate?
According to Tejarat News, the housing market has gained the highest return from December 2016 to the end of December 2014, with about 27% price growth, after cars.
This market has been in the second place among the markets since the beginning of this year with a growth of about 18%.
Meanwhile, according to the Statistics Center, the housing inflation index grew by one percent in December. Last month, the market experienced better conditions than the stock market and the dollar, but lagged behind coins, gold and cars.
This rate of return has been achieved in a situation where the annual inflation rate of Azar 1400 for the country’s households has reached 43.4%.
In this situation, do experts recommend investing in the housing market?
Housing market forecast
Borzoo Haghshenas, an economist, believes that most markets are now less profitable than inflation, but that the backlog in the housing sector is greater than in other markets; In this case, he does not recommend investing in this area.
“Housing has grown stronger and fallen less than other markets,” the economist told Trade News. According to a principle in economics, markets converge in the long run and compensate for each other’s backwardness.
He adds: “Whatever happens in the negotiations, the reality of increasing liquidity and inflation in the Iranian economy will continue, and eventually, even if Barjam is revived, these realities will show themselves.”
“Now the markets are waiting for the outcome of the negotiations and they are in a kind of recession, but next year the effects of increasing liquidity will become apparent and the markets will come out of the recession,” explains Haqshenas.
Yield less than inflation
“Under such circumstances, the housing market, which has declined less than other markets, will also experience a lower growth rate,” he said.
Regarding the housing market forecast, he added: The Statistics Center of Iran announced the latest annual inflation rate of 43.4%. According to economic indicators, this figure will probably reach about 45% by the end of the year. Under these circumstances, the efficiency of the housing sector is probably between 25 and 30%.
According to the lawyer, one of the factors that can increase housing prices is the increase in construction costs for the producer.
50 years of wrong policies
The economist points to a misguided policy over the past 50 years, adding that governments have often deliberately stagnated in markets where they can intervene to control inflation.
He emphasizes: The result of this wrong policy is the compression of the markets. This spring periodically mutates and becomes a factor in increasing inflation.
Haghshenas continues: This has happened to various markets, including capital and currency. In the case of the stock market, the government has more power to intervene, but in contrast, the housing market allows less price suppression.
Housing lag behind inflation more than other markets
The economist adds: “However, when the government tries to reduce the flow of liquidity between markets, the recession in the housing sector also increases following them and manifests itself in the form of a recession in transactions.”
“In such a situation, markets are usually less productive than inflation, but this backlog in the housing sector is greater than in other markets,” he said.
Haghshenas explains: The real estate market has not declined in line with other sectors, so it will not increase along with them in the next growth period.
According to the economist, the government must accept that rising prices are the usual cause of inflation, not the cause, and in fact, inflation cannot be controlled by a recession.
He adds: “This wrong policy, along with incorrect monetary policy, leads to the accumulation of liquidity and eventually the sudden release of its spring.” The result is an increase in inflation in all markets.
Investing in housing?
“The general public sees housing as a good market for investment and believes that no one is harmed in this sector,” he said.
He continues: The result of such a view is that capital has been accumulated in the housing market instead of entering the field of production and job creation.
“Given that the housing sector is likely to experience lower returns in the next period of market growth than other sectors, I do not recommend entering this market,” he said.
Haqshenas believes that investors should move to a market that has declined further and is likely to experience higher growth in the future.
According to him, it is better for people to have a portfolio of investments and not to invest all their financial resources in one market.
Price slump in the real estate market up to 1403
In this regard, Milad Sadeghi, an economist, said last night on the live Instagram of Tejarat News: “Whatever happens until 1403, I imagine a period of price recession in the real estate market.”
He added: housing prices can fluctuate between 28 to 31 million tomans per square meter during these three years.
Sadeghi said: “From 1403 onwards, we have to wait for the growth of the real estate market, which I predict is 55 million per square meter.”
According to this economist, the national leap plan does not create strong shocks in this market.
The housing market is not attractive
Mohammad Shahrokhi, a financial markets expert, also explained in this live talk about the future of the housing market: “We saw a 5.32 meter increase in the housing market.” Also, the trading volume has increased in the last three months, but if there is an outcome and the minimum inflation expectations are not formed, what I see for the housing market is that liquidity will be difficult, but we will not have a price reduction.
He cites three factors as the reason for this; Price stickiness, Iranians’ desire to keep property, and commodity inflation ahead.
According to Shahrokhi, in such circumstances, the housing market is not attractive for investment; Except in the case of pre-sale designs.
Read the latest housing news on the Tejarat News Housing Market page.