Why Iran’s Property Market is Unlikely to Boom anytime soon

By Alireza Ramezani for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iran Business News.

Signals from the Iranian real estate market suggest that a recovery is on the way, after an almost three-year-long recession. Yet there are contradictory statements being made about the likelihood of a property boom.

Indeed, those who are practically engaged in the housing industry are relatively optimistic about speedy growth, while analysts believe a sharp hike in prices is unlikely.

The number of property deals in the 12-million-strong market in Tehran rose by 27.6% in the month to July 21, compared with the same period last year. However, the figure dropped 4% compared with the month before, according to the Central Bank of Iran’s latest housing report.

Meanwhile, trading of mortgage bonds in the over-the-counter Iran Fara Bourse rose 11% in the week to July 21, ILNA reported, citing data released by the Central Securities Depository of Iran.

The head of Tehran’s real estate union, Hessam Oghbai, and his predecessor, Mostafa Khosravi, are both of the opinion that demand for residential buildings is on the rise. Khosravi predicts that growth will reappear in the second half of the Iranian fiscal year running to March 20, 2017, and that it will probably jump in the subsequent year.

Yet the market is still a long way from the 14,000 deals per day during 2011 and 2012, when housing prices doubled as a result of intensified financial sanctions, which led to the harsh depreciation of the rial.

Many housing experts such as Hossein Raghfar, a Tehran-based economist and university lecturer, believe that the government has to step in and increase lending in such a way that mortgages will cover 80-85% of home values; otherwise, demand for residential units is predicted to remain low, even though there are signs of steady growth.

No comments yet.

Leave a Reply