“Whenever price growths in parallel markets exacerbate, home prices also go up, but the end result will be recession for the housing sector,” Hesam Oqbaei also told ISNA.
He pointed out that the price hike in foreign currency and gold markets have been more accentuated compared to home price jumps. He also predicted that the disproportionate growth will persist in the next five to six months, leading to stagnancy of the housing market.
If his prediction is realized, it would mean that the ailing housing sector will have to deal with recession again after only one year of boom that commenced late last year. Before that, the sector was mired in one of its longest ever recession that lasted more than five years, Financial Tribune reported.
According to Oqbaei, the trend of stagnancy in home deals coupled with hikes in home prices will continue during the fifth month of the current year that ends on Aug. 22.
The Central Bank of Iran’s report on Tehran’s home market showed that prices surged by a staggering 54.2% year-on-year, as the number of home deals declined by 9.2% during the fourth month.
The official also opined that recent government measures will fail to have an impact on the market and prevent further price jumps. He was referring to recent announcements by the Ministry of Roads and Urban Development that it wishes to pass a bill in parliament, which will increase the maturity periods of home tenement contracts to two years instead of the current one year. This is aimed at stabilizing unruly rent prices.
“The main solution is for the government to manage land prices and reform monetary and banking policies that have dangerous and pernicious faults,” Oqbaei said.