Iran: Uptick in Monthly Housing PMI

EghtesadOnline: The Purchasing Managers' Index for the housing sector in the seventh month of the current fiscal year (Sept. 22-Oct. 21) settled at 53.13 from 50.54 in the preceding month (Aug. 22-Sept. 21).

News ID: ۷۵۱۴۱۹

07 November 2020

Iran Chamber of Cooperatives has measured PMI for the country’s real-estate and construction sector, under the Farsi acronym “Shamekh”, for the seventh month of the current Iranian year ending Oct. 21.

The new data show the overall PMI settled at 53.13 in the seventh Iranian month from 50.54 in the sixth fiscal month, indicating a 5.12% increase.

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 50 in the month ending Oct. 21, indicating a 24.01% increase compared with the previous month’s reading of 40.32.

The "supplier deliveries" sub-index, which measures how fast deliveries are made, decreased from 50.54 in the month ending Sept. 21 to 46.88 in the month ending Oct. 21, indicating a 7.24% decline.

The "raw materials (construction materials) inventory" sub-index improved 6.18% from 41.94 in the month ending Sept. 21 to 44.53 in the month leading to Oct. 21.

The "employment" sub-index increased 8.99% from 45.16 in the sixth month to 49.22 in the seventh Iranian month.

To calculate housing PMI, seven secondary criteria were also surveyed by ICC, including "raw materials purchase prices", which stood at 96.77 in the month ending Sept. 21. The sub-index increased by 0.92% to stand at 97.66 in the month ending Oct. 21.

"Warehouse inventory" slid 0.77% to 43.75 in the seventh Iranian month from 44.09 in the sixth fiscal month.

The "exports" sub-index settled at 45.31 in the month ending Oct. 21 from 44.62 in the month ending Sept. 21, registering a 1.55% increase.

"Prices of products or services" grew 0.67% to stand at 82.81 in the month ending Oct. 21 from 82.26 in the month ending Sept. 21.

"Fuel consumption" plummeted 6.58% from 45.16 in the sixth Iranian month to 42.19 in the seventh Iranian month.

"Sales" improved by 2.33% from 38.17 in the sixth month to 39.06 in the seventh month.

And, the "performance expectations for the following month" sub-index settled at 41.41 in the month ending Oct. 21 from 36.02 in the month ending Sept. 21, showing a 14.96% growth.

Tehran YOY Housing Inflation Breaks Above 100%

The Central Bank of Iran's latest report on Tehran's housing market shows year-on-year inflation of the sector exceeded 100% in the capital city.

According to CBI, the average price of each square meter of a residential property in Tehran stood at 267.2 million rials ($939) during the seventh month of the current fiscal year, showing a surge of 110.1% over last year’s same month as average prices were registered at 127.15 million rials ($446) then.

Last time, the YOY inflation of housing sector was above 100% in the month ending June 21, 2019.

Home prices in the capital city increased by 10% compared to 242.88 million rials ($853) in the sixth month of the current year.

A total of 8,656 homes were sold in Tehran during the seventh month, registering a 2.3% increase compared with the preceding month and 154.5% growth compared with the same month of last year.

The CBI data also show that during the month ending Oct. 21, newly-built residential properties up to five years old constituted the highest proportion of deals at 37% (or 3,205 deals), down by 4.9 percentage points compared with the same month of last year.

That lost share was added to homes above 11 years. Homes with a lifespan of 11-15 years, 16-20 years and above 20 years accounted for 13%, 19% and 12.8% of total deals compared with the same month of last year’s 12.6%, 15.3% and 10.5%, respectively.

The share of deals involving homes that were six to 10 years old decreased from 19.6% of the total deals of last year’s same month to 18.2% this year.

The distribution of dealt properties shows that among Tehran’s 22 districts, District 5 grabbed the highest share of total deals at 14.7%. It was followed by districts 10 and two with a share of 9.4% and 8.4%, respectively.

All-in-all, 10 districts (five, 10, two, four, 14, seven, one, eight, 15, and 11) grabbed the lion's share of the deals at 73.4% with the remaining 12 districts holding a 26.6% share.

Among Tehran's 22 districts, District 1 registered the highest average home price of 568.7 million rials ($1,998) per square meter. District 18 offered the capital city's cheapest homes with an average per-square meter price of 124.3 million rials ($436). The aforesaid numbers show a respective increase of 110.9% and 125.1% YOY.

Residential units with an average price range of 160 million rials ($562) to 180 million rials ($632) per square meter were highest in demand in Tehran during the Iranian month under review, as they grabbed an 8.2% share of all deals.

They were followed by units priced at 140 million rials ($492) to 160 million rials per square meter with a share of 7.9% and homes priced at 120 million rials ($421) to 140 million rials per square meter with a share of 7.6%.

From the total number of deals, 58.3% belonged to homes cheaper than the average per-square meter price of the city (i.e., 267.2 million rials or $939).

Residential units with a floor area of 50-60 square meters registered the highest number of sales with a 14.7% share of total deals.

Units with an area of 60-70 square meters and 70-80 square meters came second and third with a share of 14.3% and 11.4%, respectively. All-in-all, residential properties with an area of less than 80 square meters had a 54.5% share of total deals.

CBI data further show that homes worth between 6 billion rials ($21,089) and 8.5 billion rials ($29,876) were the most popular with a 13% share of total deals. These were followed by homes with a price tag of between 8.5 billion rials and 11 billion rials ($38,664) and those priced at between 11 billion rials and 13.5 billion rials ($47,451) with a share of 11.2% and 8.2% of total deals.

Collectively, homes valued under 18.5 billion rials ($65,026) had a 52.6% share of total home deals in Tehran during the seventh month of the current Iranian year.

During the first seven months of the current Iranian year, the number of home deals finalized in Tehran totaled 63,577, which shows a 77.6% rise year-on-year.

In the same period, the average price of each square meter of a home in the capital stood at 208.91 million rials ($734), signaling a YOY surge of 64.3% compared with the seven months of last year.

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 26.8% and 29.6% respectively during the seventh month of the current year compared with the similar month of last year.