The housing market is in the trap of inflationary stagnation / does the house become more expensive? – Tejarat News
According to Tejarat News, the analysis of housing market developments shows that in October this year, the number of housing transactions reached 5,400. This amount is exactly according to the number of housing transactions in April 2019. But the important point in this regard is the 900% growth of the average housing price in October of this year compared to April of 1996! In this month, the average price of each residential unit in Tehran was four million and 370 thousand tomans.
The price of housing in 1996 and its comparison with the current situation is important because in this year, the country’s inflation was single digit. It should be noted that the inflation rate in April 1996 was equal to 6.9%.
Surveys show that the state of housing market transactions in April 2016 was not better than this year, but not worse! In other words, although the pace of housing price growth has been slow due to single-digit inflation this year, the transaction process is also in the lowest trading month of the real estate market (April), with a relatively booming season this year and its 42.9% inflation (October). ) has been the same! It should be noted that the number of transactions in the month of April is always lower than other time frames due to the coincidence with the Nowruz holiday, but the transactions in October are still relatively prosperous in continuation of the summer transactions. It should be mentioned that the housing price index in October this year shows the figure of 43 million and 700 thousand tomans.
Another important point in this comparison is that housing prices have experienced the said astronomical growth in only 5.5 years, while the number of transactions has remained at the same level.
Opposite movement of prices and transactions
But does this comparison indicate that the housing market has entered a period of inflationary stagnation? The housing market traditionally has relatively predictable periods of prosperity and recession, and the direction of this market can be recognized to some extent. The main indicator of the recession period of the market is the decrease in the number of transactions compared to the market capacity. This index may sometimes be associated with a very large price reduction in a way that reduces the attractiveness of buying and selling and sellers withdraw from the market, which, of course, has not been experienced much due to the constant lack of supply in the Iranian housing market.
But what can always be seen in Iran’s housing market is periods of recession accompanied by an increase in housing prices, which is known as a period of inflationary stagnation. In periods of stagnant inflation, markets are generally faced with price growth and rising inflationary expectations, but at the same time, significant transactions are not carried out in the market. A look at the trend of Iran’s housing market also shows that real estate transactions are currently suffering from the same disease.
The effect of the growth of the dollar price on strengthening housing inflation
In recent days, the dollar has also experienced a high price growth and has quickly affected the markets; The capital market was faced with the growth of indices, the gold and coin market increased, and the car price also moved on the upward path. The field survey of the real estate market also indicated that housing prices are also increasing; In such a way that most of the sellers have withdrawn from uncertain transactions and have been waiting for further price growth.
Previously, the housing market was suffering from the recession that was imposed on it due to the decrease in the investment power of the people and weak demand due to the high inflation of the economy, but the strong growth of the dollar price in recent days has again strengthened the inflationary expectations, which has the effect of changing Housing sales rates can be seen in real estate consulting offices.
In an interview with Tejarat News, Iraj Rahbar, a member of the board of the mass builders’ association, emphasized the housing market due to the growth of the dollar in recent days. According to him, the increase in the price of the dollar will increase inflationary expectations and also increase the price of construction materials, which will ultimately lead to the growth of housing prices, but because the supply of housing in the market is not in line with the real demand and the purchasing power of the people has been greatly reduced. There will not be many transactions in this market. The leader’s statements can be considered to mean that the housing market is in a period of inflationary stagnation, which started in the previous months and is gradually intensifying.
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