Amid the outbreak of the novel coronavirus, the Purchasing Manager's Index for Iran's housing sector fell to the lowest level in the month ending March 19 since the index was first calculated for the sector in the Iranian month starting Oct. 22, 2019, with a reading of 44.30.
Iran Chamber of Cooperatives’ latest report on PMI for the real-estate and construction sectors (under the Farsi acronym “Shamekh”) for the final month of the last Iranian year shows the overall index settled at 35 from 51.76 in the 11th month (Jan. 21-Feb. 19), indicating a 32.38% decline.
PMI is an indicator of the health of economic sectors. It provides information about current business conditions to decision-makers, analysts and purchasing managers.
Raw material inventory, employment conditions, new orders, supplier deliveries and export/production conditions were among the criteria assessed, yielding a final score of between 1 and 100.
If a business scores 50, it means that no change has been perceived compared to the previous month, while scores higher or lower than 50 indicate that the business is booming or stagnating respectively.
The housing PMI is based on five major survey fields: new orders, raw material inventory, production, supplier deliveries and employment.
The survey includes 12 questions about business conditions and any changes, whether it be improving, no changes or deteriorating.
It is measured through a monthly survey sent to senior executives of 100 companies active in the real-estate sector. It is based on five major survey areas: "new orders" with a coefficient of 30%, "raw material inventory" (10%), "production" (25%), "supplier deliveries" (15%) and "employment" (20%).
The "new orders" sub-index stood at 31 in the month ending March 19, indicating a 32.39% decrease compared with the previous month (46.47).
The "supplier deliveries" sub-index, which measures how fast deliveries are made, fell from 49.41 in the month ending Feb. 19 to 37 in the month ending March 19, indicating a 25.12% decline.
The "raw materials (construction materials) inventory" sub-index decreased 24.19% from 43.53 in the month ending Feb. 19 to 33 in the month ending March 19. The "employment" sub-index decreased 4% from 45.88 in the 11th Iranian month to 44 in the 12th month.
The number of home sales in Tehran reached 10,242 during Feb. 20-March 19, indicating a decline of 24.4% compared with the month before. The average price of each square meter of a residential unit in Tehran stood at 155.68 million rials ($973) last month, registering an 8.6% increase month-on-month
To calculate housing PMI, seven secondary criteria were also surveyed by ICC, including "raw materials purchase prices", which stood at 77.06 in the month ending Feb. 19. The sub-index climbed 10.3% to stand at 85 in the month ending March 19.
"Warehouse inventory " dropped 11% to 45 in the 12th Iranian month from 50.59 in the 11th fiscal month.
The "exports" sub-index dropped to 47 in the month ending March 19 from 48.24 in the month ending Feb. 20, registering a 2.57% decline.
"Prices of products or services" decreased 1.98% to stand at 64 in the month ending March 19 from 65.29 in the month ending Feb. 19.
"Fuel consumption" decreased 32% from 52.94 in the month ending Feb. 19 to 36.
"Sales" tumbled 26% in the 12th Iranian month from 50 in the 11th fiscal month to 37 in the 12th month.
And, "performance expectations for the following month" sub-index settled at 27 in the month ending March 19 from 39.41 in the month ending Feb. 19 to register a 31.49% decline.
Prices Rise Despite Decline in Sales
The latest report of the Ministry of Roads and Urban Development’s Planning and Housing Economy Office shows Tehran’s home prices kept on rising, despite the decline in the number of deals in the month leading to March 19 compared with the preceding month.
The number of home sales in Tehran reached 10,242 during Feb. 20-March 19, indicating a decline of 24.4% compared with the month before.
The average price of each square meter of a residential unit in Tehran stood at 155.68 million rials ($973) last month, registering an 8.6% increase month-on-month.
Among Tehran’s 22 districts, District 1 registered the highest average home price of 332.17 million rials ($2,076) per square meter, followed by District 3 with 271.63 million rials ($1,697) per square meter and District 2 with 233.65 million rials ($1,460) per square meter.
District 18 offered the capital city’s cheapest homes with average per-square meter prices standing at 74.79 million rials ($467), followed by District 20 with 75 million rials ($468) per square meter and District 17 with 79.6 million rials ($497) per square meter.
The total value of home deals during the month under review stood at 147,500 billion rials ($921 million), posting a decline of 8% compared with a month before, Tasnim News Agency reported.
Mostafa Qoli-Khosravi, the head of Tehran Realtors Association, says home sales in the capital city dropped by 40% in the Iranian month ending March 19, following the outbreak of coronavirus.
“Home deals, including sales and rents, fell to 6,979 compared with 11,703 in the preceding month [Jan. 21-Feb. 19] due to the virus. The decline in people’s physical presence at real-estate agencies and the rise in the number of homes put up for sale and rent has led to a change in homeowners’ preferences. Some of them are now willing to sell their properties at prices below market value,” he was quoted as saying by IRNA.
