Iran's Q1 Housing Loans Surge 32%

EghtesadOnline: Facilities allocated to Iran's housing sector during the first quarter of the current fiscal year to June 21 increased both in terms of volume and value, the central bank's data show.

News ID: ۷۸۳۴۴۵

29 July 2018

A Saturday review of the Central Bank of Iran data by HIBNA, the news website of Bank Maskan, the agent bank of the housing sector, shows that the volume of loans allocated in the housing and construction sector during this year's Q1 increased by 32% in terms of value. It was 16% higher than the average of all loans since banks and credit institutions' lending portfolio grew by 16.3% in the same period.

CBI figures indicate that the sector received 98.90 trillion rials ($2.25 billion) in the first quarter of the current year, whereas data for the Q1 of the previous year put the figure at 74.68 trillion rials ($1.7 billion), according to Financial Tribune.

"This shows that the growth of lending in the housing and construction sector has been higher compared to other sectors and has managed to put the housing and construction sector in a boom phase in terms of both construction and home deals," Bank Maskan wrote in its review.

Maskan Leading Role

Roughly half of all facilities handed out in the housing and construction sector is provided by Bank Maskan.

According to the bank's stats, the lender allocated 85,000 loans during this year's Q1 worth 30 trillion rials ($681.35 million). The bank's paid facilities this spring grew by 82% in terms of numbers and 35% in terms of value.

From those numbers, about 38,700 loans were allocated for purchasing homes during th Q1, signaling a year-on-year hike of 57%. The total value of all allocated loans to prospective home buyers registered an annual rise of 52%.

"In addition to increasing the volume of loans compared to the similar period of the year before, Bank Maskan has also based its lending strategy on stimulating consumer supply," the bank wrote, adding that the number of single-member or low-member families has significantly increased in recent years, but builders don't pay attention to this and continue to construct large homes.

"Bank Maskan is looking to convey this message this year that builders must move in a way that puts the real focus on residential units proportionate to the real needs of consumers," the lender said, adding that the focus is now funding the construction of homes with an area of under 100 square meters in areas with real demand.

This is while on Saturday a senior official at the Ministry of Roads and Urban Development also confirmed the discrepancy between housing supply and demand in Iran.

"At present, the average floor area of apartments in Iran is 120 square meters whereas real demand is for residential units with an area of 60 to 70 square meters," Hamed Mazaherian, MRUD's deputy for housing and construction, told ILNA.

This is while, he added, Iran's housing sector is actually facing a surplus of homes, as the total number of homes in the country is around 27 million compared to 24 million Iranian households.

But as the official pointed out, the significant thing is that the majority of these surplus units are luxury homes that currently have no buyers as real demand is for cheap homes with lower floor areas.

"The reality is that there is an imbalance in the supply of residential units," Mazaherian said.

According to the MRUD official, the ministry is now offering incentives to mass builders to construct homes with lower areas.

"Builders who fall in line with this macro policy will be given priority in terms of facilities," he said.

Mazaherian reiterated that the ministry is eying two-year or longer periods for home rent deals to help embattled tenants who have had to pay skyrocketing rents this year. He had announced a few days ago that a bill to implement this proposal is in the parliament and pending approval.