Recovery of Iran’s housing market indicated
Recovery of Iran’s housing market indicated
As the first signs of recovery transpire, Tehran’s property market is poised for a pre-boom trajectory that should lead to an upturn.
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Downtown Tehran
Iran’s real estate market outlook is encouraged by demand rising for smaller and less expensive property in Iran. “First-time home buyers and applicants for new houses in distressed areas of Tehran are behind the anticipated surge in the sale of cheap apartments in the capital, while the market for expensive and luxury apartments will lag behind.” said Honorary Adviser to Minister of Roads and Urban Development (Iran) Hossein Abdoh-Tabrizi. “A 10% surge in home deals signals a 'pre-boom' for the market,” said Hessam Oqbaei, head of Tehran Association of Realtors.
Maskan Bank is the only bank in Iran which can provide residential mortgages, and its Housing Savings Account, launched in June 2015, provides first-time buyers with loans at the rate of 14%. Applicants must make an initial deposit and wait for a year to become eligible for the mortgage. The government, meanwhile has raised the ceiling for home loans, offering mortgages with higher adjusted loan to value ratio, from 5-10% in the past to 30% at present.
“It is necessary to increase the allocation of long-term loans to boost the purchasing power of lower-income families who intend to buy homes but cannot afford them,” Abdoh-Tabrizi continues.
The 2017 National Population and Housing Census puts Tehran’s population at at 8,293,000, a 5% increase from the previous census in 2012.
Quick stats:
- In the month that ended on May 20, 2016, 15,431 homes were sold in Tehran
- This was a year-on-year increase of 8.2%.
- In 2016, average price of residential units reached 40.1 million rials ($1,300) per sqm
- This is up by 2.8% compared to the same period in 2015.
- Buyers preferred apartments with an area of 50-80 sqm
- These account for 44.5% of the total sales
- Homes built in and after 2010 accounted for 52% of the total home sales
Foreign investment in Iran’s property market
According to Abdoh-Tabrizi, Iran needs a bigger mortgage market and foreigners can help by entering Iran's real-estate and construction market. "A big opportunity has recently opened in Tehran exchange in the secondary mortgage market," he said. He feels the market has potential for billions of dollars of loans with good securitization and collateral.
According to Abdoh-Tabrizi, the country also needs big investment on construction of roads and bridges, and this spending can go on for years in Iran. "Currently, $300 billion worth of infrastructure projects are up for grabs by foreigners," he said.
Iranfile.ir, IHome.ir, Eskano.com, Alounak.com and Moshaver.com are among the websites heralding the online trend for real estate advertising. Hesam Oqbaei, head of the Tehran Association of Realtors told the Financial Tribune that he predicts all deals in housing will be started and concluded online within the decade.
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