Economy, Business And Markets

Collective Action Needed to Tackle Housing Recession

Collective Action Needed to Tackle Housing Recession Collective Action Needed to Tackle Housing Recession

Housing prices are not expected to rise in the second half of the current Iranian year (started March 21) said Hesam Oqbaei, head of Tehran Association of Realtors, IRNA reported.

Pointing to the sluggish housing market he said Iran’s Third Real Estate Exhibition is slated for February 26-29, 2016 to help boost the recession-plagued housing sector. Oqbaei called for “stabilizing home prices, using modern construction methods, cutting costs and integrating the findings of knowledge-based companies in building projects,” saying these are among the topics to be discussed at the upcoming expo.

The housing analyst stressed the role of loans as another solution to help lift the industry. Pointing to the average price of 41 million rials ($1368) per meter for housing units in Tehran and 14 million rials ($482) in the provinces, he said the loans offered by banks and their high rates had failed to move the market.

The Money and Credit Council, the highest policymaking body of the central bank, agreed in May to almost double the loan ceiling for first-time buyers in Tehran to 800 million rials ($24,000).

Given the average price of an apartment per square meter in Tehran, a 75-square-meter apartment costs over 3 billion rials ($87,000), nearly quadruple the  loans bank offer, while ideally a loan should cover at least 80% of the total value of a housing unit.

“We are negotiating with five banks to convince them to raise the ceilings of their loans to home buyers,” he said.  

Oqbaei criticized the government’s auto loan scheme saying that the money should instead have been used to stimulate the key construction sector.

 Decline in Real Estate Deals

Oqbaei’s also touched upon the declining volume of real estate deals throughout the country. In the month ending September 22, a total of 88,216 home sale deals were registered, which shows a decline compared to the previous month.

The figure for Tehran was at 13,123 during the same period compared to previous month’s 14,726. Rentals were at 16,246 during the month ending October 22, marking a decline from the previous month’s 20,129.

The housing official warned that if the housing sector stays stuck in the rut in the coming year (starts March 2016), there is the “danger of total collapse and bankruptcy for the industry making it incumbent on officials to take urgent measures” to revive the key sector and a major employer that involves hundreds of other associated  industries.