The housing situation brought out the mass builders
According to Tejarat News, a general review of the market situation construction In Tehran, it shows that construction investors are locked in a pentagon and if the economic and non-economic variables do not change in the direction of collapsing this situation, they have no way out of this pentagon. The current conditions are so unfavorable for the builders that the amount of construction demand in the month of June is faced with a significant and unexpected decline. Apart from the fact that the circulation of construction in the city of Tehran this spring has reached below the historical low of last year, in Khordad only permits were issued for the construction of 1,600 residential units, which is almost equal to the circulation of construction in Farvardin this year (the month when the markets are half closed), which means Khordad 1401 There has been a state of “quasi-holiday” in the market of construction activities.
Half-finished constructions
to report the world of economyIncidentally, in the month of June, the average price of housing in Tehran transactions was accompanied by a monthly growth of 8.5%, which was unprecedented for about three years before that. In this way, the jump in housing prices in the last month of this spring marked the stagnation of housing production again. The sides of the cell in which the activists of the construction market are stuck are the weak purchasing power, the unpredictability of the future of prices and the pulse of housing transactions, the difficulty of selling completed units under the influence of the possible inflationary trend in the future, the continuation of the inflationary trend in the construction materials market and the increase in construction costs. Finally, it is more economical to maintain half-finished buildings than to complete and sell them to start new construction. Regarding the last side, construction activists say that due to the inflation of materials and lack of purchasing power, the income of construction has actually decreased and reached about 30 to 35%; At the same time, they believe that if the inflation situation in different markets is not controlled, it will be more profitable for them to maintain half-finished buildings and the value of their assets will be maintained in this way.
The way out of the vicious cycle of property
In the spring of this year, about eight thousand new and newly built residential units were traded, which compared to the issuance of six thousand and 200 building permits, shows the minimal balance between the supply and demand of these units. Even if, considering the one to two year period of construction and completion of the units, we compare the circulation of last spring’s construction with this spring’s transactions, the amount of construction and sales is almost equal, which is a better situation than the lack of new construction, but at the same time, the conditions Ideally, the rate of construction would exceed the rate of demand. In any case, the first season of the 8th year of the heavy construction recession was spent with the continued collapse of construction, and this is despite the fact that according to experts, the continuation of this situation will make the path to end the recession of housing transactions difficult.
What more than anything has caused the builders to leave the construction activity market in Tehran is the uncertainty about the future, while the policy makers of the housing sector are focusing on strengthening the supply in the form of building greenhouses in the form of a housing project, instead of solving this uncertainty. It is one million. According to experts, the vicious cycle formed in the construction market will stop if economic and non-economic measures inside and outside the housing market reduce uncertainty about the future.
The most key plan of the government to save the housing market from the deep stagnation of construction can be curbing inflation, which is considered a hopeful measure and stimulates various market participants, including construction investors, to resume their activities. Also, reducing the risk caused by the non-economic variable situation, i.e. negotiations to lift sanctions, can help economic stability and contain inflation. Of course, there will be space for construction investment in the market without inflation. But what is clear is that if there is no improvement in the construction statistics and the spring circulation is repeated in the next three seasons of this year, the total number of residential units for which construction permits have been issued will reach about 30,000 units at the end of this year, which is equivalent to one season. Construction activity is in the normal state of the market (before the housing boom in 2017). Therefore, the concern and focus of the policy maker of the housing sector at the moment, above all else, should be to save the builders from the spiral that has prevented them from continuing their activities.