Monthly Housing PMI Declines

EghtesadOnline: The Purchasing Managers' Index for the housing sector in the eighth month of the current fiscal year (Oct. 22-Nov. 20) settled at 50.78 from 53.13 in the preceding month (Sept. 22-Oct. 21).

News ID: ۷۵۱۶۵۱

07 December 2020

Iran’s Chamber of Cooperatives has measured PMI for the country’s real-estate and construction sector, under the Farsi acronym “Shamekh”, for the eighth month of the current Iranian year ending Nov. 20.

The new data show the overall PMI settled at 50.78 in the eighth Iranian month from 53.13 in the seventh fiscal month, indicating a 4.42% 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 37.5 in the month ending Nov. 20, indicating a 25% decrease compared with the previous month’s reading of 50.

The "supplier deliveries" sub-index, which measures how fast deliveries are made, increased from 46.88 in the month ending Oct. 21 to 48.44 in the month ending Nov. 20, indicating a 3.33% growth.

The "raw materials (construction materials) inventory" sub-index improved 8.78% from 44.53 in the month ending Oct. 21 to 48.44 in the month leading to Nov. 20.

The "employment" sub-index increased 9.53% from 49.22 in the seventh month to 53.91 in the eighth Iranian month.

To calculate housing PMI, seven secondary criteria were also surveyed by ICC, including "raw materials purchase prices", which stood at 97.66 in the month ending Oct. 21. The sub-index decreased by 12% to stand at 85.94 in the month ending Nov. 20.

"Warehouse inventory" slid 16.07% to 36.72 in the eighth Iranian month from 43.75 in the seventh fiscal month.

The "exports" sub-index settled at 46.88 in the month ending Nov. 20 from 45.31 in the month ending Oct. 21, registering a 3.47% increase.

"Prices of products or services" dropped 17.92% to stand at 67.97 in the month ending Nov. 20 from 82.81 in the month ending Oct. 21.

"Fuel consumption" increased 37.02% from 42.19 in the seventh Iranian month to 57.81 in the eighth Iranian month.

"Sales" decreased by 14% from 39.06 in the seventh month to 33.59 in the eighth month.

And, the "performance expectations for the following month" sub-index settled at 50.78 in the month ending Nov. 20 from 41.41 in the month ending Oct. 21, showing a 22.63% growth.

CBI Report

A total of 4,466 homes were sold in the capital during the eighth month of the current fiscal year (Oct. 22-Nov. 20), registering a 48.4% decline compared with the preceding month but a 9.9% growth 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 271.93 million rials ($1,083) during the month under review, showing a surge of 118.2% over last year’s same month as average prices were registered at 124.63 million rials ($496) then.

Home prices in the capital city increased by 1.8% compared to 267.2 million rials ($1,064) in the seventh month of the current year.

The CBI data also show that during the month ending Nov. 20, newly-built residential properties up to five years old constituted the highest proportion of deals at 38.9% (or 1,736 deals), down by 3.1 percentage points compared with the same month of last year.

That lost share was added to homes above 15 years. Homes with a lifespan of 16 to 20 years and above 20 years accounted for 17.7% and 13.8% of total deals compared with the same month of last year’s 16.4% and 9.2%, respectively.

The share of deals involving homes that were six to 10 years and 11 to 15 years old decreased from 18.9 and 13.5% of the total deals of last year’s same month to 17.5% and 12.1% this year respectively.

The distribution of dealt properties shows that among Tehran’s 22 districts, District 5 grabbed the highest share of total deals at 12.1%. It was followed by districts 10 and four with a share of 8.6% and 8.4%, respectively.

All-in-all, 10 districts (five, 10, four, two, 14, seven, eight, 15, 11 and one) grabbed the lion's share of the deals at 70.4% with the remaining 12 districts holding a 29.6% share.

Among Tehran's 22 districts, District 1 registered the highest average home price of 550.1 million rials ($2,191) per square meter. District 18 offered the capital city's cheapest homes with an average per-square meter price of 120.4 million rials ($479). The aforesaid numbers show a respective increase of 134.3% and 99% YOY.

Residential units with an average price range of 140 million rials ($557) to 160 million rials ($637) per square meter were the most popular in Tehran during the Iranian month under review, as they grabbed an 8.6% share of all deals. They were followed by units priced at 160 million rials ($637) to 180 million rials ($717) per square meter with a share of 7.3% and homes priced at 120 million rials ($478) to 140 million rials ($557) per square meter with a share of 6.9%.

From the total number of deals, 62.1% belonged to homes cheaper than the average per-square meter price of the city (i.e., 271.93 million rials or $1,083).

Residential units with a floor area of 60-70 square meters registered the highest number of sales with a 15.2% share of total deals.

Units with an area of 50-60 square meters and 70-80 square meters came second and third with shares of 15.1% and 12.1%, respectively. All-in-all, residential properties with an area of less than 80 square meters had a 57.2% share of total deals.

CBI data further show that Tehran’s homes worth between 6 billion rials ($23,904) and 8.5 billion rials ($33,864) were the most popular with a 13.5% share of total deals. These were followed by homes with a price tag of between 8.5 billion rials ($33,864) and 11 billion rials ($43,824) and those priced at between 11 billion rials ($43,824) and 13.5 billion rials ($53,784) with a share of 10.6% and 9.5% of total deals respectively.

Collectively, homes valued under 18.5 billion rials ($73,705) had a 55% share of total home deals in Tehran during the eighth month of the current year.