Housing PMI Declines by 3.8%

Iran’s Chamber of Cooperatives has measured PMI for the country’s real-estate and construction sector, under the Farsi acronym “Shamekh”, for the 10th month of the current Iranian year ending Jan. 19.

The new data show the overall PMI settled at 58.33 in the 10th Iranian month from 60.67 in the ninth fiscal month, indicating a 3.86% decrease.  

PMI is an indicator of the health of economic sectors. It provides information about current business conditions to decision-makers, analysts and purchasing managers. 

Raw material inventory, employment conditions, new orders, supplier deliveries and export/production conditions were among the criteria quizzed, yielding a final score of between 1 and 100. 

If a business scores 50, it means that no change has been perceived compared to the previous month, while scores higher or lower than 50 indicate that the business is booming or stagnating respectively. 

The housing PMI is based on five major survey fields: "new orders", "raw material inventory ", "production", "supplier deliveries" and "employment". 

The survey includes 12 questions about business conditions and any changes, whether it be improving, no changes or deteriorating. 

It is measured through a monthly survey sent to senior executives of 100 companies active in the real-estate sector. It is based on five major survey areas: "new orders" with a coefficient of 30%, "raw material inventory" (10%), "production" (25%), "supplier deliveries" (15%) and "employment" (20%).

The "new orders" sub-index stood at 53.89 in the month ending Jan. 19, indicating a 4.99% increase compared with the previous month’s reading of 51.33. 

The "supplier deliveries" sub-index, which measures how fast deliveries are made, increased from 51.33 in the month ending Dec. 20 to 55 in the month ending Jan. 19, indicating a 7.15% growth. 

The "raw materials (construction materials) inventory" sub-index declined by 5.84% from 51.33 in the month ending Dec. 20 to 48.33 in the month leading to Jan. 19.

The "employment" sub-index increased by 0.81% from 54 in the ninth month to 54.44 in the 10th Iranian month. 

To calculate housing PMI, seven secondary criteria were also surveyed by ICC, including "raw materials purchase prices", which stood at 66 in the month ending Dec. 20. The sub-index decreased by 2.36% to stand at 64.44 in the month ending Jan. 19.  

"Warehouse inventory" dropped by 17.93% to 36.11 in the 10th Iranian month from 44 in the ninth fiscal month. 

The "exports" sub-index settled at 47.78 in the month ending Jan. 19 from 47.33 in the month ending Dec. 20, registering a 0.95% increase. 

"Prices of products or services" dropped by 7.85% to stand at 52.22 in the month ending Jan. 19 from 56.67 in the month ending Dec. 20. 

"Fuel consumption" decreased by 8.45% from 64 in the ninth Iranian month to 58.59 in the 10th Iranian month. 

"Sales" fell by 8.69% from 48.67 in the ninth month to 44.44 in the 10th month.

And, the "performance expectations for the following month" sub-index settled at 67.78 in the month ending Jan. 19 from 72 in the month ending Dec. 20, registering a 5.86% decline.

CBI Report on Tehran’s Housing Market

A total of 3,515 homes were sold in the capital during the 10th month of the current fiscal year (Dec. 21, 2020-Jan. 19), registering a 37.6% increase compared with the preceding month but a 67.1% decline compared with the same month of last year.

Data published by the Central Bank of Iran on its website also indicate that the average price of each square meter of a residential property in Tehran stood at 273.86 million rials ($1,140) during the month under review, showing an increase of 98.3% over last year’s same month as average prices were registered at 138.09 million rials ($575) then. 

Average per square meter home prices in the capital city increased by 1.8% compared to 269.05 million rials ($1,120) in the ninth month of the current year. 

The CBI data also show that during the month ending Jan. 19, newly-built residential properties up to five years old constituted the highest proportion of deals at 39% (or 1,372 deals), down by 2.8 percentage points compared with the same month of last year. 

That lost share was added to homes that were 11 to 15 years, 16 to 20 years and those above 20 years. Homes with a lifespan of 11 to 15 years, 16 to 20 years and those above 20 years accounted for 13%, 17.5% and 12.6% of total deals compared with the same month of last year’s 12.6%, 16.9% and 9.3%, respectively. 

The share of deals involving homes that were six to 10 years old decreased from 19.4% of the total deals of last year’s same month to 17.9% this year.

The distribution of dealt properties shows that among Tehran’s 22 districts, District 5 grabbed the highest share of total deals at 11.3%. It was followed by districts four and two with a share of 8.9% and 7.7%, respectively. 

All-in-all, 10 districts (five, four, two, 10, 14, seven, 15, eight, one and 11) grabbed the lion's share of the deals at 68.2% with the remaining 12 districts holding a 31.8% share.

Among Tehran's 22 districts, District 1 registered the highest average per square meter home price of 600.3 million rials ($2,500) per square meter. District 18 offered the capital city's cheapest homes with an average per-square meter price of 121.5 million rials (over $500). The aforesaid numbers show a respective increase of 99% and 86.1% YOY.

Residential units with an average price range of 140 million rials ($580) to 160 million rials ($660) per square meter were the most popular in Tehran during the Iranian month under review, as they grabbed a 7.7% share of all deals. They were followed by units priced at 160 million rials to 180 million rials ($750) per square meter with a share of 7.2% and homes priced at 120 million rials ($500) to 140 million rials per square meter with a share of 7.1%.  

From the total number of deals, 61.3% belonged to homes cheaper than the average per-square meter price of the city (i.e., 273.86 million rials or $1,157). 

Residential units with a floor area of 50-60 square meters registered the highest number of sales with a 14.9% share of total deals. 

Units with an area of 60-70 square meters came second with acshare of 14.2%. All-in-all, residential properties with an area of less than 80 square meters had a 56.4% share of total deals. 

CBI data further show that Tehran’s homes worth between 6 billion rials ($25,000) and 8.5 billion rials ($35,400) were the most popular with a 14.4% share of total deals. These were followed by homes with a price tag of between 8.5 billion rials and 11 billion rials ($45,800) and those priced at between 11 billion rials and 13.5 billion rials ($56,250) with a share of 10.4% and 8.7% of total deals respectively. 

Collectively, homes valued under 18.5 billion rials ($77,000) had a 55.5% share of total home deals in Tehran during the ninth month of the current year.