By Mahnaz Abdi

Factors expected to affect housing market in coming months

March 1, 2022 - 11:37

TEHRAN- The latest report released by the Central Bank of Iran (CBI) indicates that the average housing price rose 0.4 percent in the capital Tehran during the eleventh Iranian calendar month Bahman (ended on February 19), compared to its previous month.

It was in fact a slight increase when compared to the growth in the previous months.

The average housing price in the said month increased 16.4 percent in comparison to the same month in the previous fiscal year.

Based on the CBI data, the average price for one square meter of a residential unit in Tehran stood at 330.6 million rials (about $1,271) during the mentioned month.

Housing prices in Iran have been constantly rising over the past year due to various internal and external factors.

And, for the upcoming months, a number of factors are mentioned to affect the housing market in Iran.

One factor is the possibility of reviving a 2015 nuclear deal signed between Iran and world powers.

Some experts believe that if the mentioned deal, known as Joint Comprehensive Plan of Action (JCPOA), is revived, housing price will experience its biggest historical drop.

As Mostafa Gholi Khosravi, the head of Iran’s Property Advisers Union, has recently stated, “The housing market is waiting for the results of the [JCPOA] negotiations, and with the positive shock that the agreements bring to the market, sales will increase in the coming months.”

He believes that the market will stabilize towards the buyer and the price will decrease.

Mohammad Sadeq Al-Hosseini, an economist, predicting the housing market, said: “If the JCPOA is revived, the models predict that housing will have its biggest historical price decline; so that we will experience a 20 to 30 percent reduction in housing prices in large cities and a smaller reduction in prices in small cities.”

Mehdi Soltan-Mohammadi, a housing market expert, is of the opinion that in the long run, it is not possible to make an accurate forecast, but in the short run, housing prices will be lower than inflation.

He said, “The amount of price increase depends a lot on inflation, and if agreements are made in terms of the JCPOA, and the government has more access to foreign currency and oil revenues, we will see lower forex rates and a noticeable reduction in inflation. But if these things do not happen and the agreement is not reached and the pressures continue and the government policies are not anti-inflation and we see significant inflation as in previous years, housing prices will also be affected and will rise.”

In terms of if the National Housing Movement can affect prices in the housing market, the expert said, "This plan is still very vague and it is not a short-term plan, and it will take a long time until these houses are built and enter the housing market; and these houses will not be built where we are witnessing a sharp rise in prices; like Tehran, but will be built in the suburbs or in small cities; because in big cities, the government does not have enough facilities to supply land, even if it has, it is in poor areas of the city, and as a result, an important part of the housing market, which is expensive areas of Tehran, will not be affected by this plan.”

After the National Housing Action Plan, the National Housing Movement is the government’s second major program for providing affordable housing units to low-income classes.

As reported, the construction of 750,000 such housing units is underway across the country under the framework of the National Housing Movement.

Regardless of all the factors which may affect the housing market, necessary actions should be also taken to control this market.

As the head of Iran’s Property Advisers Union has said that housing prices in the country should decrease at least 25 percent in order for people to be able to afford to purchase.

Gholi Khosravi has stressed the need for establishing a market regulation headquarters for the housing sector to monitor the activities of dealers and real estate agencies in order to balance the prices.

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