Predicting the future of housing / when to invest in real estate?
According to Tejarat News, among the four financial markets, the dollar, gold, stock exchange and housing, during the first half of this year, the dollar had the highest price increase and the housing market ranked second. Also, the housing market has had the best performance in the last year. Of course, in September, the growth of prices in the housing market declined and even became negative by 9%.
Now the question is whether the housing market is a good place to invest in these conditions? Experts on Instagram Live Trade News, Have offered different opinions on this issue.
Mohebbi: The housing market is on the rise
Maryam Mohebbi, a financial markets expert, said: “Housing prices are affected by various factors, including 60% of the prices of materials, 30% of land and 10% of other costs such as permits.”
He added: the price of materials is increasing; Because their prices are rising worldwide, but the value of Iran’s national currency is declining. As a result, I do not expect a downward trend in housing prices.
Referring to the government’s promise to build one million housing units a year, Mohebbi said: “Even if the housing market reacts positively to this promise and we see a decrease in prices, people can compensate for this downward trend by renting housing.”
He described the housing market as safe and said: “This market has a good return. Nor can the government intervene much in it and carry out price suppression.
According to Mohebbi, the housing market can still be attractive even if the recession continues or prices fall.
Mirzaei: The housing market has little room for growth
But Nima Mirzaei, another financial market expert on the housing market, said: “One can not imagine more growth than inflation for this market.” Some issues, such as the decision to build four million homes, psychologically control the market. It is likely to grow less than inflation in the medium term.
Referring to the price bubble in the housing market, he added: “This market has found a serious competitor, which is buying property in Turkey and Cyprus.” If housing prices rise further, investing in other countries will become more attractive. Although I personally do not approve of this move, the competing market is growing in terms of benefits such as citizenship.
Mirzaei said: “Nevertheless, the property market is stable and suitable for the long term.” Especially for those who are looking for a bank deposit, for example.
Diba: Housing is not cheap
Also in the housing market, Mojtaba Diba, a financial market expert, said: “In the housing market, the government’s plan to build one million housing units contradicts the claim of controlling inflation, and in practice, a much smaller number of properties will probably be built.” However, this plan sends signals to the market.
He added: “Housing is one of the safest markets for investment and there is likely to be no sharp decline in this market.” Stability in this market is more likely until 1402 and 1403. Over the past few months, trading has grown somewhat, but the continuation of the recession is not unexpected.
Diba said that during the recession, the builder may give a slight reduction in the price of housing, but he is not willing to receive, for example, half of its price. Nevertheless, the best time to shop is during a recession.
Sadeghi: A sharp fall in prices is unlikely
Milad Sadeghi, an economist, also explained about the future forecast of the housing market: In the housing market, there is no trading recession, but the price recession will continue until about 1403. At that time there is a possibility of a significant price increase. Prices in Tehran may even reach 55 to 60 million tomans per square meter.
He added: “The possibility of a sharp fall in this market is very low because the housing market in Iran is not credit and homogeneous and housing is a valuable asset that people are not willing to apply high price discounts.”
Sadeghi said: “This market has powerful players such as banks, foundations and institutions that do not allow a fall of, for example, 30 or 40 percent.”
Awareness: The housing leap plan is not expert
But Nima Agahi, a financial market expert, said of the government’s plan to build four million housing units in the market: “Governments in the first year of their work, usually with the aim of attracting public opinion and in fact with political goals, come up with plans; The government’s housing plan is similar, and not very expert.
Pointing out that this plan has many ambiguities, he said: “One of the ambiguous issues is whether this plan is defined according to the real price of materials in the market or the mechanism of preferential and imposed prices?”
Agahi added: “Considering the performance of the government so far and the policy of mandatory pricing, it seems that the second mechanism should be used, because only in this case it is possible to finance the housing project and achieve its goals.”
Emphasizing that the housing plan of the main government has heavy inflationary effects, he said: “This plan, due to the high volume of construction, disrupts the order of related markets, especially steel and cement, and price increases are an inevitable part.” Finally, the government does not accept responsibility for this price increase.
In response to a question about the future of the housing market, Agahi said: “This plan will not significantly reduce property prices.” Perhaps, in the most optimistic case, only a 10% reduction in prices may occur.
According to him, during the same period, challenges such as rising inflation and rising exchange rates occur, which neutralize the effect of this plan.
Heshmati: The government’s plan is not practical
Mohammad Heshmati, another financial market expert, also believes that governments in Iran usually turn to the housing market during a recession and move to increase bank interest rates to escape inflation. These ways are handy and the 13th government should not take them.
He added: the price of housing consists of three parts: land, materials and the cost of the construction license. In the housing leap plan, the government provides the land for free and is probably not too strict for the license. The main issue in this plan is the payment of materials.
Heshmati, referring to the government’s request to build units at a cost of two million and 750 thousand per square meter, said: “It is not possible to build housing at the costs that the government has predicted.”
He said: “At first glance, the payment of facilities in this plan is very good and people pay the bank installment instead of paying the rent; Eventually they become homeowners, but paying for these facilities on an annual basis of one million units requires a very high number.
Heshmati added that in order to provide the necessary resources, the government may have to divert facilities from the industrial sector to housing, which is causing the industry to stagnate. The second solution is to borrow from the central bank, which increases liquidity.
“Both solutions will ultimately lead to increased long-term inflation, while the housing boom plan has little effect on lowering prices in the market because people who now own housing are reluctant to sell their assets at half price, for example,” he said. This plan may only prevent price increases.
Samavati: The housing market is not attractive until next year
Mehdi Samavati, a financial market expert, believes in predicting the future of the housing market: In housing and land, there is no investment attractiveness for the next year.
He added: “This does not mean a reduction in prices in the residential property sector, because people do not offer housing at a severe discount and take advantage of the rental market.” But commercial real estate is in recession with prices likely to fall.
“Whenever governments want to intervene widely in the market, they have to avoid it,” Samawati said. The Housing Leap Plan is such an intervention; It also has an empty pocket. This plan is not even comparable to Mehr Housing; Because at that time the price of oil was more than $ 100.
Sadeghin: The housing market is rising from 1403
“The housing market is in recession for at least the next two and a half to three years,” said Ali Sadeghin, a financial markets expert. In 1401, I recommend pre-purchasing small units or building housing with a delivery time of 1403. Investing in the housing market should be done with the vision of 1403 onwards.
He added: “Housing has not improved by more than 10 to 15 percent at the height of the recession and we should not expect a significant reduction in prices.”
Read the latest housing news on the Tejarat News Housing Market page.