The total volume of loans allocated by Iranian banks and credit institutions to the housing and building sector grew by 28.5% year-on-year during the first seven months of the current fiscal year that ended on Oct. 22, data published by the Central Bank of Iran show.
In the aforesaid period, the banking system allocated 3.58 quadrillion rials ($28.75 billion) worth of loans to all economic sectors. This indicates a 14.2% increase when compared to the first seven months of the previous fiscal year.
Of this amount, the share of the housing and building sector comprised 306 trillion rials ($2.45 billion). Since the share of the embattled sector stood at 238 trillion rials ($1.91 billion) during the first seven months of last year, its share of loans has grown by 28.5% in the current year.
The growth is more than the overall growth of lending to all economic sectors.
"Therefore, during the first seven months of the current year, the stable and increasing trajectory of lending to the housing and building sector has continued in spite of fluctuating conditions created by cruel US sanctions," wrote Bank Maskan, the state-run agent bank of the housing sector on its official news outlet HIBNA.
"This shows that banks related to the housing sector have registered a positive performance on the side of supply," the bank said, adding that the sustainability of this trend will require more support from policymakers and greater focus on Bank Maskan.
"Improving the process of financing through capital increase in the housing and building sector can lead to a boom in the sector," the lender said.
After US President Donald Trump unilaterally withdrew from Iran's nuclear deal with world powers in May, he reimposed sanctions on Iran's banking sector, among others. But Iran's national currency, the rial, had already nosedived due to psychological factors of worsening conditions and local mismanagement.
This led to an inflationary wave across the country, which also hit the housing market very hard. Tehran's housing market is now sliding into recession while other parts of the country have been hit with rising prices and dwindling home deals.
This has prompted the government to increasingly utilize Bank Maskan loans to prevent the ailing housing sector from plunging further.
Figures provided by CBI provide further insights into each sector of the economy in terms of bank lending.
Unsurprisingly, loans allocated for purchasing homes constituted a majority of facilities doled out to the housing and building sector during the aforesaid seven-month period. They amounted to 155 trillion rials ($1.25 billion) or about half of all loans handed out in the sector.
Housing loans providing working capital were the second-biggest category, as they amounted to 53 trillion rials ($427 million) or 17.5% of all housing loans. They were followed by 33 trillion rials ($266 million) of loans doled out for renovating homes and 5.29 trillion rials ($42.66 million) for purchasing private goods.
In terms of the number of loans, central bank data show that 667,100 loans were allocated to the housing and building sector during the first seven months of the current year. This brings the average value of each loan to about 460 million rials ($3,700).
During the same period, 5,220,667 loans were allocated to all sectors of the economy, which brings the average volume of each loan to about 70 million rials ($564). This shows that the average weight of each loan handed out to the housing sector was much more noticeable than the total average.
