Financial Tribune- Boosting the purchasing power of home buyers has been the main agenda of President Hassan Rouhani’s administration in the past four and a half years and the latest statistics of home sales across the country indicate a relative success in this area, a report by the government’s official news outlet shows.
According to one measure, the volume of real-estate residential deals across the country during the month to Dec. 21, 2017, marked an increase of 50% compared with the same month of last year, the Central Bank of Iran’s data show.
This is while the latest report of Iran Fara Bourse–the country’s over-the-counter market–for the first nine months to Dec. 21indicates that the trading of home loan bonds also surged by 43% year-on-year.
By the time the current administration took office in 2013, the ceiling for home loans did not exceed 250 million rials ($5,800) while the figure has currently reached 1.8 billion rials ($41,860), which indicates a sixfold increase in less than five years.
On the other hand, the government managed to lengthen the repayment period of loans while bringing down their interest rates, which significantly encouraged people to use these credits.
An assessment of the deals reveals that small residential units costing less than 3 billion rials ($69,700) accounted for the lion’s share of home sales across the country, indicating that the deals were not speculative and that real home applicants had stepped forward because of the new facilities.
Housing experts also believe that the government’s measures succeeded in addressing real demand for homes and that’s why the housing market started to show signs of recovery from March 2017.
According to Hossein Abdoh-Tabrizi, an advisor to the roads minister, the Iranian government has been trying to prevent speculative activity in the housing sector and the ministry entered the sector to ensure that families can afford to buy an apartment or at least rent one.
Abdoh-Tabrizi noted that the Central Bank of Iran has allocated a credit line to Bank Maskan for launching the Housing Saving Account Scheme that could have had a better impact on the market if the CBI taken the measure sooner.
“If the government could also support other banks to pay home loans and subsidize the interests, the housing market recovery could accelerate,” he added.
This is while the government also aims to resolve the issues of distressed urban neighborhoods by promoting their renovation, which can also create a significant number of jobs.
The government’s approach in this regard is obvious in the new budget plan, as according to the head of Plan and Budget Organization of Iran, Mohammad Baqer Nobakht, a portion of the 73-trillion-rial ($1.69 billion) credit for boosting employment will be spent on the housing sector, especially to renovate distressed areas to use it as a vehicle for generating jobs.
According to the government’s projections, more than 100,000 old residential units in the country will be renovated during the next Iranian year (starting March 21).
Housing experts also believe that affordable residential units will experience a notable surge in sales in the coming year.