Economy, Business And Markets

Housing Recovery Tied to Multiple Factors

Housing Recovery Tied to Multiple FactorsHousing Recovery Tied to Multiple Factors

The 10.4% rise in house rents over the last six months is the result of the  recession and low interest rates, prompting landlords to increase rents to make up for the loss in profit, a Tehran-based housing expert said.    

Noting that the property market has yet to recover from years of stagnation, Salman Khademolmelle said revival of the long dormant housing market is interrelated with other key factors, such as oil revenues and economic recovery, Eghtesadnews reported.

“The nuclear deal with world powers had a primary effect on the housing sector by driving up housing bond prices from 750,000 rials ($25) to 900,000 rials ($30)  but it was not enough to pull the market out from the doldrums,” he said.

Iran signed a historic nuclear agreement with six world powers (permanent members of the UN Security Council plus Germany) in July in Vienna. The deal lifted all nuclear-related sanctions on Iran in exchange for curbs on its disputed nuclear energy program.

The expert noted that despite the plunge in international oil prices from $120 per barrel in 2014 to $20, it is forecast that crude will rebound to $40 per barrel this year. This development along with the expected foreign investments in the housing sector can help provide the stimulus for the property market, the website quoted him as saying.

The expert said strengthening the demand side is a “Key to revitalizing the housing sector which can be realized only through domestic credit or foreign investment.”

“On the Issue of foreign investment, there are talks about foreign banks coming to Iran and offering loans at 6-7% interest rates,” he said adding that the new financial resources will, hopefully, help lift the economy including the housing industry.