Hesam Oqbaei, the deputy head of Tehran Association of Realtors, concedes that if the fluctuations continue, they will damage the housing sector, but won’t increase home prices very much.
“If foreign currency rates are not controlled and keep on rising, they will surely influence the housing market,” he told ILNA, but added that as the housing market saw notable price hikes last year, it does not have the capacity to experience another significant increase.
“Price growth will be between 10-15%,” Financial Tribune quoted him as saying.
In a separate talk with Fars News website, the official said because currency fluctuations influenced home prices in the last quarter of the previous fiscal year that ended on March 20, it is “unlikely” that they could again do that now.
Data from the Central Bank of Iran, which monitor housing market changes in Tehran in the form of monthly reports, indicate that the capital city witnessed significant home price hikes in that period.
The average price of each square meter of a residential unit in Tehran grew by 16.7% when compared with the same month of the previous year during the 10th month of last year to Jan. 20, while out of the city’s 22 districts, District 5 experienced the highest price rise at 27.3%.
The next month to Feb. 19 was also marked by an escalation as average prices increased 22.3% YOY and District 5 home prices grew by 37.8%. But the final month of the year indicated the worst price jumps, according to CBI, as average prices underwent an annual rise of 26.1% while District 5 prices jumped by a whopping 40.9%.
This is all while the central regulator put the annual inflation growth rate at 9.6% for the previous fiscal year.
In terms of home deals, the final month of last year also proved to be lackluster as the volume of deals only grew by 0.5% compared with the similar month of the year before. This is while Tehran’s housing market experienced a notable 50.2% jump in the volume of home deals only three months before.
According to Oqbaei, these fluctuations will have no effect on home prices, but it must be noted that we witnessed their impact in the housing market last year and certainly currency fluctuations cannot influence home prices by the end of spring.
He opined that currency fluctuations directed capital to both the foreign exchange and housing markets, noting that a majority of people took their capital to the foreign exchange market, but those looking for a more stable and long-term investment turned to the housing market.
“Field reports indicate that people are coming in to purchase homes more and more, which signals a rise in real demand from potential homeowners, but they are currently doubtful because currency rates are yet to stabilize,” he said.
Oqbaei referred to the proposed increase in fuel prices by the government that was not implemented as another factor that could have exerted a negative influence on home prices, if executed.
“Managing liquidity is one of the other factors that can influence the housing market while persisting increases in US dollar prices will cause imbalance and disturbance in the housing market,” he said.
According to the latest CBI data, liquidity grew by an annual rate of 22.3% during the ninth month of the previous year to reach more than 14.63 quadrillion rials ($386.73 billion). The liquidity surge is one of the factors worrying all officials, but the 22.3% increase still indicates a slight improvement as the liquidity growth rate stood around 30% during the initial months of the previous year.