The head of Tehran’s Association of Realtors does not envisage any dramatic shift in the sluggish housing market and has said prices and rents will not increase until at least the end of 2017.
“Unlike foreign exchange and gold markets, things don’t change happen overnight in the housing sector,” Hesam Oqbaei told ILNA, dismissing claims that cuts in interest rates and the slight improvement in housing demand would have an inflationary impact.
“The housing sector takes time (to improve) and because we have been witnessing a severe recession in the markets since 2013, the arrival of new capital is not to the extent that it should or could raise concerns about higher prices.”
Stressing that buyers need not worry about a “wave” of price hikes in the housing sector anytime soon, he added that forecasts suggest stability in prices up until the fiscal year ends in March 2017.
Asked about his evaluation of the rental market by the end of summer, Oqbaei said as rents normally follow in the footsteps of home prices, “and as this year’s housing prices have not seen any increase compared to last year, our belief is that rents, more or less will remain stable.”
Low purchasing power and the high and increasing inventories are seen as two other major factors behind the sluggish housing market. Market observers believe there will not be any robust improvement in the home sale industry anytime soon. Things will only change when the economy picks up and conditions are better across the country, a builder said last week when asked about the future of the industry.
According to official data, the national average price of residential buildings was 28.8 million rials ($947) per square meter in the last fiscal year that ended in March, having grown 1.5% compared to the year before.
“This year rents will match last year’s and although rents are influenced by inflation or interest rates, the rental market is not eligible for such a comparison because tenants income cannot keep up with inflation and interest rates,” the realtor said.
According to Oghbaei, the housing market is in a “pre-boom” mode and a single factor is not responsible for this progress. “I believe many factors including housing loans and the deep recession coming to an end contributed to the recent increase in home sales.”
According to figures released by the Central bank of Iran, a total of 15,431 homes were sold in Tehran during the month that ended on May 20, marking an annual increase of 8.2%. The latest report was seen as a sign that the property market is slowly but steadily awaking from the long slumber that saw home sales drop to historic lows.
