Economy, Business And Markets

Housing Market Warming Up

Housing Market Warming UpHousing Market Warming Up

T he stagnant housing market in the second half of the current year (ending on March 20) led to an upward trend in the sector and saw financially strong customers enter the market.

Experts believe that the remaining customers are putting their decisions on hold in light of the government’s promises to bring changes to the market that would benefit the low/middle income customers.

The demand in the housing market increased over the second half of the year, leading to higher number of transactions in the market.

The latest data suggest that 160,866 housing transactions were registered over the past one month (December 22-January 20), indicating 22,016 (15 percent) increase compared with the 138,850 transactions over the same period last year.

The data shows increase in both purchase and rentals, with Tehran recording the highest number of total transactions.

While some experts suggest that the housing market is still in recession, the latest data shows that the market has passed the recession period and is stepping into promising times.

Meanwhile, the Rouhani administration is planning to increase the maximum limit on the mortgage loans offered by Bank Maskan (the Housing Bank) – a publicly owned bank that provides incentives to support government housing policies.

The loan limit currently stands at 350 million rials ($10,150 at market exchange rate). The government is planning to increase it to 600 million rials ($17,400) by next year.

Bank Maskan CEO, Mohammad Hashem Botshekan has backed the idea of increasing the mortgage ceiling to $17,400 in large cities, arguing that applicants in these cities are more likely to be able to afford repaying their loans. “The mortgage offered by Bank Maskan works as a saving fund which enables the applicants to save money and use the incentives after a reasonable waiting period,” Eghtesad News quoted him as saying.

According to board member, Abolqasem Rahimi, Bank Maskan has provided 25 percent more mortgage loans since the beginning of the current Iranian year compared with the similar period last year, indicating that the customers still rely on the banks’ loans for purchasing new houses.  

In yet another move to help shore up the industry, the Central Bank of Iran (CBI) recently mandated all 22 commercial banks to provide mortgage loans to at least 300,000 applicants across the country every year. The loan value is set at 500 million rials ($14,700 at market exchange rate) in large cities. The CBI has also called for creating a ‘mortgage fund’ in each commercial bank.

Bank Mellat, which is responsible for providing 5 percent of the total home loans, was the first bank to officially pass on the message to all of its branches; Donya-e-Eqtesad newspaper quoted the Urban Development and Revitalization Organization’s report.

Experts believe the amount of mortgage loans provided by the banks is insufficient considering that the average per square meter price of apartments in central Tehran is more than a thousand dollars.