Housing price forecast in 1401 / property will be cheaper?
According to Tejarat News, House price In the first 5 months of the thirteenth government, it has increased by 14.2%. The latest report of the Central Bank on the developments in the housing market in Tehran also indicates a 20.3% increase in the price of each meter of housing in January 1400 compared to the same period last year.
Of course, according to this report, the point-to-point growth of housing prices in January 2016 was equal to 98.3%, and the rate of price growth has slowed down this year.
In this situation, can we hope for a reduction in housing prices in 1401? Housing market expert Mansour Gheibi believes the available evidence does not suggest such a possibility. According to him, even if prices fall, it is insignificant compared to the 200% increase in housing prices in recent years.
Borzoo Haghshenas, an economist, also believes that the housing market is facing a stagnant month and that its returns will be lower than inflation.
Evidence does not show a reduction in prices
In an interview with Tejaratnews, Gheibi, a housing market expert, stressed that given the external and internal factors affecting the housing market, there is no expectation of a reduction in prices in this sector.
He explains: Two categories of internal and external factors affect housing prices. Internal factors include issues such as demographic composition, marriage statistics, willingness to move or enlarge a home, number of primary homes, and housing facilities.
“External factors include international political and economic relations and the state of parallel markets, including currency and gold,” he added.
The housing market expert continues: If the government, in particular, can manage external factors properly, the housing market will start 1401 calmly and move towards relative prosperity. Under these conditions, prices also reach equilibrium.
He emphasizes: “But if the negative impact of external factors continues, along with the accumulation of issues related to internal factors such as youth marriage and the new demand for housing, as well as the increase in the number of tenants, it will create turmoil in the market in terms of price. The recession is fueling this sector.
The results of the decline in people’s purchasing power in the housing market
“When people’s purchasing power decreases, the demand for housing decreases even though there is a need for it,” explains Ghaybi. The priority of households in such situations is to meet basic needs.
He adds: “Few people are looking to go from renting to buying a house or turning their 75-meter house into a 90-meter one.”
The unseen continues: The absence of such movements reduces the production and supply of housing. On the other hand, new families who need a home are coming to the market, but the lack of supply potentially raises prices.
“The continuation of these conditions makes it impossible to predict a flourishing market in the housing economy for next year,” he said.
Gheibi emphasizes: These challenges can not be eliminated by increasing the amount of mortgages and payment of deposit facilities. As the latter has led to a more than 50% increase in rents.
The impact of negotiations on the housing market
“The domestic economic and social challenges in Iran have made international news too important for the markets,” he said. However, it is also necessary to calm down in foreign affairs.
“Even if the Vienna talks are successful and the dollar depreciates, it alone will not be able to drive down prices in the housing market,” he said.
“The housing sector can be the main driver of the national economy,” he said. Prices can also be balanced if trade returns to the market and construction and production continue. But given the economic and social realities of society, such a situation is unlikely in 1401.
“Investing in macroeconomics requires intellectual and psychological security and price balance in various sectors of the economy, especially inputs and raw materials,” he said.
Even if housing prices fall, it is not noticeable
“Housing prices have risen by about 220 percent in recent years, but the biggest decline in the same period has been between 15 and 20 percent,” says Ghaibi.
He adds: “30% of Iran’s economy is related to the housing sector, and in all sectors, there should be calm and price declines to reduce the cost of housing.”
Gheibi emphasizes: Promises to build four million homes can also inflame markets. Especially since several governments over the past years have not been able to achieve the desired result for Mehr housing. There is little hope that the promise of the 13th government will be fulfilled.
Housing price growth, less than inflation
Borzoo Haghshenas, an economist, also believes that housing prices will rise in 1401, but that the sector will be less productive than inflation.
“Housing is likely to have a stagnant market,” he told Trade News. Statistical Center of IranAnnounced the latest annual inflation rate of 42.2%. This figure is likely to increase according to economic indicators. In this case, the efficiency of the housing sector may be between 25 and 30%.
Read the latest housing news on the Tejarat News Housing Market page.