Economy, Business And Markets

Speculations Rife in Housing Market

Speculations Rife in Housing MarketSpeculations Rife in Housing Market

Speculations are rife in the housing market that real estate will see a restriction in property supply in the year 2017.

A housing expert warned against the ill effects of "house grabbing," saying, "The greed for making huge profits has lured house grabbers to buy huge numbers of housing units, with the hope of selling them at double the prices when property rates go up."

The low number of building permits issued since 2014 is likely to bring about a severe shortage in supply of housing units starting from January 2017 and continuing until the year-end, an attractive prospect for opportunists who have hoarded large numbers of properties to earn huge profits, Mohammad Reza Hasanlu, CEO of Housing Economy Management Research Institute, told ISNA, reported on Monday.

Hasanlu referred to the data from the State Organization for Registration of Deeds and Properties and the Office of Land and Trade Registry in Tehran and other metropolitan cities, saying a boost in real estate market is likely to occur in 2017 based on the perceived increase in people's purchasing power and growth of the housing trade by virtue of banks' increased lending and potential  benefits of Housing Savings Account.

He added that some natural persons and legal entities including "certain private banks and finance and credit institutions" are buying newly-built houses in Tehran and other major cities in huge numbers.

"A concrete example is a credit institution which has bought 2000 newly-built or under construction houses in different locations of Tehran ranging from 50- 60 sq m to140-150 sq m, targeting a variety of socio-economic deciles.    

Hasanlu stressed there is no yardstick to identify the actual number of houses bought for speculative purposes, noting that natural persons are faking rental agreements to evade the newly enforced law to tax empty properties.

On the other hand, legal entities such as banks and credit institutions use their subsidiary companies to grab land, but in the wake of the new rule set by the Money and Credit Council (MCC) to ban bank subsidiaries from raising capital, the unruly financial bodies pulled a new trick by creating mock-up companies and registering illegal purchases under their title.

He said land grabbing is "an untraceable activity," hindering all efforts by research institutions to acquire factual data.