The red state of housing construction

According to Tejarat News, what is the latest status of housing construction in Tehran?

Quoted from Online economyregardless of the difference in the announced numbers, the historical trend of housing prices based on the information of the Central Bank and the Statistics Center is almost similar to each other; Where the reports of these two institutions show a 10-fold increase in housing prices in Tehran from the beginning of 2016 to July this year.

Meanwhile, the average price of all goods and services shows an increase of about 5 times during this period. This issue has caused some people to believe that this sharp increase in housing prices is caused by the formation of a price bubble in this market, and on the other hand, some others believe that this price growth is caused by the macroeconomic conditions of the country and cannot be related to a price bubble. knew

Regardless of whether the housing price growth over the past 5 years has led to a price bubble or not, an important issue that is considered a threat to the housing market and causes more inflammation in this market is the sharp reduction in construction. An issue that can aggravate the imbalance between supply and demand in the coming years.

Normally, during the housing market boom, we see an increase in investment in this sector; In other words, when housing prices are increasing, the amount of construction is also associated with a relative increase; This cycle is one of the factors that helps control prices in this market by increasing supply.

But now the worrisome thing is that in the last 5 years, although we witnessed the most intense period of boom in the housing market in the past few decades, investment in the housing sector is not experiencing favorable conditions.

According to the report of Statistics Center, the seasonal average number of buildings started by the private sector in Tehran from 2016 to the end of last year was about 2,100 units. In other words, only about 2,100 construction projects have been started by the private sector in each season.

Meanwhile, the average of this figure since 1380 has been about 3500 units. Statistics show that during times of boom in the housing market, the amount of construction reaches more than its long-term average. For example, between 1385 and 1387, which is considered one of the booming periods of the housing market, the seasonal average of the number of buildings started by the private sector in Tehran reached about 4,600 residential units.

All these numbers and figures show that the conditions in terms of housing supply and investment in this sector are worrisome; An issue that can lead to the continuation of inflammation in this market.