Housing price in Tehran falls 1.1% in a month

December 28, 2020
real estate

TEHRAN- Housing price in Tehran city has dropped 1.1 percent in the ninth Iranian calendar month (November 21-December 20), from its previous month, according to the latest report released by the Central Bank of Iran (CBI).

The CBI’s report put the average price for one square meter of a residential unit at 269.1 million rials (about $6,407) in the capital city in the ninth month of this year, up 98.9 percent from the figure for the same month in the past year.

Meanwhile, the number of real estate deals has fallen 42.8 percent in Tehran in the ninth month of this year compared to the eighth month, and 73.2 percent compared to the same month of the past year.

Back in September, a member of the Iranian Parliament (Majlis) Civil Committee had said that the drastic and unprecedented rise in housing prices in recent months is going to lead the housing market to a recession in the coming months.

“With the dramatic and unprecedented rise in housing prices, the market is expected to enter a recession for at least three to four years in the coming months, but naturally, as the recession intensifies, housing prices will fall by about 10 to 20 percent”, Mojtaba Yousefi stated.

Unfortunately, housing prices have risen by about 200 percent in recent months, and this has created many problems for real house buyers, he lamented.

“The main problem is that in such a market real buyers cannot afford to buy houses and instead the market has become a playground for brokers and speculators.”

According to the official, the housing market trend in Iran has been sinusoidal, meaning that housing prices have risen over a period of time and then the market has entered a recession, however, in the last two years the trend has become contrary to the previous years and the housing prices have been constantly increasing.

Last week, the deputy managing director of Iran Mercantile Exchange (IME) for economic studies said that the exchange plans to presell housing units through standard salaf bonds in near future.

“We will soon see the issuance of standard housing salaf bonds in the capital market to help financing in the housing sector and construction of new housing units in the country,” Javad Fallah said.

A standard parallel salaf is an Islamic contract similar to futures, with the difference being that the contract’s total price is paid in advance.

According to the official, IME is following two major approaches for implementing the mentioned plan, one is offering bonds related to the already existing housing units like assets owned by the government and state banks and the other is preselling the units that are going to be constructed in the future.

Outlining the procedure, the official said the total value of a housing unit or a construction project will be securitized and converted into marketable bonds which will be offered through salaf contracts.

The official further explained that each salaf bond would be backed by one square meter of a housing unit, which means each bond would be offered at the price of one square meter of a particular housing unit at the time of offer.

Fallah underlined the implementation of this method as a way to develop reliable investment in the housing sector and added: 'In this way, micro-capitals will lead to the increase of construction and supply of housing units and will consequently curb the rampant rise in housing prices.”

Back in July, the High Council of Securities and Exchange announced the approval of a decision for establishing a specialized exchange for real estate trade in the country.

It will be the fifth exchange operating in the country after the Tehran Stock Exchange, the junior equity market Iran Fara Bourse, Iran Energy Exchange, and the IME.

tehrantimes



Top News



real estate

Steel products output increases 9.5%
January 17, 2021
Aluminum ingot output climbs 51%
January 13, 2021
Steel ingot output up 8% in 9 months yr/...
January 11, 2021