Slight Recovery in Iran's Housing PMI

EghtesadOnline: Iran Chamber of Cooperatives has measured the purchasing managers’ index (PMI) for the country’s real-estate and construction sectors, under the Farsi acronym “Shamekh”, for the ninth month of the current Iranian year ending Dec. 21.

News ID: ۷۴۹۴۹۵

20 January 2020

The new report says housing PMI in the month increased to 39.56 in the ninth Iranian month (Nov. 22-Dec. 21) from 38.5 in the eighth Iranian month (Oct. 23-Nov. 21), indicating a 2.75% improvement, according to Financial Tribune.

The index stood at 44.30 in the seventh Iranian month (Sept. 23-Oct. 22) when the first PMI report for the housing sector was published by ICC.

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 levels, employment conditions, new orders’ conditions, 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 areas: new orders, raw material inventory levels, 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 the importance weight of 30%, "raw material inventory levels" (10%), "production" (25%), "supplier deliveries" (15%) and "employment" (20%).

Results published by Iran Chamber of Cooperatives show that the PMI for the "performance" sub-index, including "production" and "supply", which is the sub-index with the biggest impact on the overall index, stood at 39.56 in the month ending Dec. 21 from 38.5 in the month ending Nov. 21 and 44.30 in the month ending Oct. 22.

The "new orders" sub-index stood at 34.62 in the month ending Dec. 21, indicating a 1.08% decline compared with the previous month (35). It was at 46.20 in the month ending Oct. 22.

The "supplier deliveries" sub-index, which measures how fast deliveries are made, decreased from 52.53 in the month ending Oct. 22 to 41.5 in the month ending Nov. 21, but rebounded to 43.96 in the month ending Dec. 21.

The "raw materials (construction materials) inventory levels" sub-index decreased from 41.77 in the month ending Oct. 22 to 37 in the month ending Nov. 21, but improved to 36.26 in the month ending Dec. 21.

The "employment" sub-index stood at 50.63 in the seventh Iranian month, 37 in the eighth Iranian month and 41.76 in the ninth Iranian month.

To calculate housing PMI, seven secondary criteria were also surveyed by ICC, including "raw materials purchase prices", which stood at 60.76 in the month ending Oct. 22. The sub-index increased to 82 in the month ending Nov. 21 and 84.62 in the month ending Dec. 21.

"Warehouse inventory level" stood at 42.41 in the seventh Iranian month, 51 in the eighth fiscal month and 53.5 in the ninth fiscal month.

The "exports" sub-index fell from 47 in the month ending Nov. 21 to 43.96 in the month ending Dec. 21. It stood at 49.37 in the month ending Oct. 22.

"Prices of products or services" decreased 0.18% to stand at 56.4 in the month ending Dec. 21 from 56.5 in the month ending Nov. 21. The sub-index was 45.57 in the month ending Oct. 22.

"Fuel consumption" declined from 60 in the month ending Nov. 21 to 54.95 in the month ending Dec. 21. It was 50.63 in the month ending Oct. 22.

"Sales level" was at 47.47 in the seventh fiscal month, 36 in the eighth fiscal month and 47.47 in the ninth fiscal month.

And the "performance expectations for the following month" sub-index settled at 61.39 in the month ending Oct. 22. It was 44 in the month ending Nov. 21 and 44.5 in the month ending Dec. 21.

CBI Report on Tehran Housing Market

The Central Bank of Iran's latest report on the housing market of the capital city shows a total of 9,537 homes were sold during the ninth month of the current fiscal year (Nov. 22-Dec. 21) to register a 134.7% rise compared to the month before.

The number of home sales in Tehran rose by 40% compared with last year's similar month.

The average price of each square meter of a residential unit in Tehran stood at 135.25 million rials ($1,032) during the month under review, indicating an 8.5% increase compared to the preceding month.

Compared with the same month of last year, the average prices showed a surge of 41.6%.

Newly-built residential units up to five years old grabbed the highest proportion of deals with 42.6%, down by 0.8 percentage points compared with the same month of last year.

The lost share was added to homes with a lifespan of six to 10 years and homes that are 16 to 20 years old. The two categories accounted for 19.3% and 15.7% of total deals respectively.

The share of deals for homes with a lifespan of between 11 and 15 years decreased from 13.9% of the total deals in the last year’s same month to 12.8% this year. Homes above 20 years old posted a share of 9.7% of total deals, compared with 11.2% of the same month of last year.

Residential units with an average price range of 90 million rials ($687) to 105 million rials ($801) per square meter were the highest in demand, as they grabbed a 12.1% share of all deals.

They were followed by units priced at 75 million rials ($572) to 90 million rials ($687) per square meter and those priced at 105 million rials ($801) to 120 million rials ($916) per square meters with a share of 11.3% and 10.5%, respectively.

From the total number of deals, 59.4% belonged to homes cheaper than the average per-square meter price of the city (i.e. 135.25 million rials or $1,032).

Residential units with a floor area of 50-60 square meters registered the highest number of deals with a 16% share of total deals.

Units with an area of 60-70 square meters and 70-80 square meters came next with a respective share of 14.8% and 12.4%. All-in-all, units with an area of less than 80 square meters had a 56.7% share of total deals.

CBI data further show Tehran’s homes worth between 3 billion rials ($22,900) to 4.5 billion rials ($34,351) topped demand, with a 13.2% share of total deals.

Homes with price tags of between 4.5 billion rials and 6 billion rials ($45,801) and those between 6 billion and 7.5 billion ($57,251) came next with a respective share of 12.4% and 11.2% of total deals. Collectively, homes valued under 9 billion rials ($68,702) had a 51.2% share of total home deals.