Housing PMI Down 4.5% to 50.54

EghtesadOnline: Purchasing Managers' Index for the sixth month of the current fiscal year (Aug. 22-Sept. 21) settled at 50.54 from 52.94 in the preceding month (July 22-Aug. 21).

News ID: ۷۵۱۲۰۶

07 October 2020

Iran Chamber of Cooperatives has measured the purchasing managers’ index (PMI) for the country’s real-estate and construction sector, under the Farsi acronym “Shamekh”, for the sixth month of the current Iranian year.

The new data show the overall PMI settled at 50.54 in the sixth Iranian month from 52.94 in the fifth fiscal month, indicating a 4.53% decline.

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.

Survey Fields

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 40.32 in the month ending Sept. 21, indicating a 3.45% decrease compared with the previous month’s reading of 41.76.

The "supplier deliveries" sub-index, which measures how fast deliveries are made, increased from 48.23 in the month ending Aug. 21 to 50.54 in the month ending Sept. 21, indicating a 4.79% improvement.

The "raw materials (construction materials) inventory " sub-index fell 8.59% from 45.88 in the month ending Aug. 21 to 41.94 in the month leading to Sept. 21.

The "employment" sub-index decreased 9.68% from 50 in the fifth month to 45.16 in the sixth Iranian month.

To calculate housing PMI, seven secondary criteria were also surveyed by ICC, including the "raw materials purchase prices", which stood at 82.94 in the month ending Aug. 21. The sub-index increased by 16.67% to stand at 96.77 in the month ending Sept. 21.

"Warehouse inventory level" slid 12.85% to 44.09 in the sixth Iranian month from 50.59 in the fifth fiscal month.

The "exports" sub-index settled at 44.62 in the month ending Sept. 21 from 45.29 in the month ending Aug. 21, registering a 1.48% decrease.

"Prices of products or services" grew 13.69% to stand at 82.26 in the month ending Sept. 21 from 72.35 in the month ending Aug. 21.

"Fuel consumption" plummeted 12.75% from 51.76 in the fifth Iranian month to 45.16 in the sixth Iranian month.

"Sales" dropped 18.89% from 47.06 in the fifth month to 38.17 in the sixth month.

And, "performance expectations for the following month" sub-index settled at 36.02 in the month ending Sept. 21 from 52.36 in the month ending Aug. 21, showing a 31.20% decline.

Tehran Housing Market Under CBI Review

A total of 8,463 homes were sold in the capital during the sixth month of the current fiscal year (Aug. 22-Sept. 21), registering a 6.8% decline compared with the preceding month.

The number saw a year-on-year growth of 203.7% compared with the 2,787 deals in the corresponding month of last year.

New data published by 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 242.88 million rials ($832) during the month under review, showing a surge of 91.7% over last year’s same month, as average prices were registered at 126.67 million rials ($432) then.

Home prices in the capital city increased by 5.1% compared to 231.07 million rials ($788) in the fifth month of the current year.

Property Deals in Detail

The CBI data also show that during the month ending Sept. 21, newly-built residential properties up to five years old constituted the highest proportion of deals with 38% (or 3,216 deals), down by 2.8 percentage points compared with the same month of last year.

The lost share was added to homes above 11 years. Homes with a lifespan of 11 to 15 years, 16 to 20 years and above 20 years accounted for 13.6%, 17.4%, and 12.7% of total deals compared with the same month of the last year’s 12.7%, 15.9% and 10.9%, respectively.

The share of deals involving homes that were six to 10 years old decreased from 19.7% of the total deals of last year’s same month to 18.3% this year.

The distribution of dealt properties shows that among Tehran's 22 districts, District 5 grabbed the highest share of total deals at 15.4%. It was followed by districts 10 and two with a share of 9.5% and 9%, respectively.

All-in-all, 10 districts (five, 10, two, four, 14, eight, seven, 15, one, and 11) grabbed the lion's share of the deals at 72.8% with the remaining 12 districts holding a 27.2% share.

Among Tehran's 22 districts, District 1 registered the highest average home price of 507.9 million rials ($1,733) per square meter. District 18 offered the capital city's cheapest homes with an average per-square meter price of 104.1 million rials ($354). The aforesaid numbers show a respective increase of 102.8% and 81.5% YOY.

Residential units with an average price range of 120 million rials ($409) to 140 million rials ($477) per square meter were the most popular in Tehran during the Iranian month under review, as they grabbed an 8.9% share of all deals. They were followed by units priced at 140 million rials ($477) to 160 million rials ($546) per square meter with a share of 8.1% and homes priced at 160 million rials ($546) to 180 million rials ($614) per square meter with a share of 7.5%.

From the total number of deals, 57.7% belonged to homes cheaper than the average per-square meter price of the city (i.e. 242.88 million rials or $828).

Residential units with a floor area of 50-60 square meters registered the highest number of sales with a 15.3% share of total deals.

Units with an area of 60-70 square meters and 70-80 square meters came second and third with shares of 14.4% and 11.7%, respectively. All-in-all, residential properties with an area of less than 80 square meters had a 55.2% share of total deals.

CBI data further show that Tehran’s homes worth between 6 billion rials ($20,477) and 8.5 billion rials ($29,010) were the most popular with a 13.8% share of total deals. These were followed by homes with a price tag of between 8.5 billion rials ($29,010) and 11 billion rials ($37,542) and those priced at between 3.5 billion rials ($11,945) and 6 billion rials ($20,477) with a share of 10.6% and 8.4% of total deals respectively.

Collectively, homes valued under 16 billion rials ($54,607) had a 50% share of total home deals in Tehran during the sixth month of the current year.

Six-Month Perspective

During the first half of the current Iranian year (March 20-Sept. 21), the number of home deals finalized in Tehran totaled 54,921, which shows a 69.5% year-on-year rise.

In the same period, the average price of each square meter of a home in the capital stood at 199.2 million rials ($680), registering a YOY surge of 56.7% compared with the six months of last year.

Tenancy in Urban Areas

The central regulator also reports changes to tenancy prices in the capital city and across the urban areas.

According to CBI, the price of rented residential units in Tehran and across urban areas increased by 27.3% and 30.1% respectively during the sixth month of the current year compared with the similar month of last year.