Financial Tribune- The Iranian housing sector is witnessing a notable increase in residential deals in a sign of imminent recovery, but a deputy roads and urban development minister said this will not translate into higher prices.
“I can assure you that we will not experience price jumps in the coming months and the next year [starting March 21],” Hamed Mazaherian, deputy for housing and buildings at the Roads Ministry, also said in a press conference, ISNA reported.
According to the official, the significant rise in the number of home sales recently means that the “housing market is currently devoid of speculators” who are not real customers and only purchase and sell residential units to make a profit.
Latest figures released by the Central Bank of Iran and the Housing Office with the Roads Ministry show that home sales in Tehran reached 17,800 during the ninth month of the current fiscal year to Dec. 21, registering a 50% surge compared with the same period of last year.
Mazaherian said the “soft” rise in home prices and sales are no cause for worry and assured that “this trend [of rising home deals] will continue to favor real purchasers until the next year”.
The official noted that statistics for the 10th month of the current fiscal year to Jan. 20 will provide a better benchmark for further analyses, but predicted that the year-on-year increase in housing deals will be less marked compared to last month’s 50%.
“When we look at the annual statistics of the housing sector, the price hikes are not worrying and are in line with the inflation rate,” he said.
CBI’s latest report indicates that in the first nine months of the current fiscal year, the average price of a residential unit in the capital experienced a year-on-year growth of 8% while rents also increased in proportion to the inflation rate of about 10%.
Mazaherian conceded that half a million residential units currently remains vacant in Tehran and there is not much hope of currently filling them, as the main demand in the market emanates from people with a medium purchasing power.
Many of those units are situated in District 1 that includes Tehran’s northern and more affluent neighborhoods, which are beyond the purchasing power of most people.
While construction and housing activity has declined in recent years due to a slowdown in all economic sectors, the government hopes to revitalize the market through middle-income and first-time home buyers.
According to Bank Maskan’s news website, during each month of the previous Iranian year (ended March 20, 2017), the average number of first-time loan applicants stood at 12,000 to 15,000, which means about 500 people have opened an account as first-time homebuyers.
This is while in the three months to Dec. 21, the number of new monthly applicants has surpassed 20,000, indicating that the queue for cheap home loans is getting 800 people longer each day.
Bank Maskan is the agent bank of the housing sector and the organizer of Housing Saving Accounts launched on June 2015, to provide housing loans for first-time home buyers and requires applicants to make an initial deposit and wait for a year to 18 months to become eligible for the loan.