Behind this increase in housing prices, there is a price fall ahead
Mohammad Hossein Adib
Cheap housing price depends on three factors:
1. Supply and demand: In some parts of Iran, low-cost housing is not produced in accordance with the need. In these areas, low-cost housing increases due to the existence of more demand than supply, which is normal.
2⃣ Payment of housing loans to 330 thousand people per year by Housing Bank increases the demand for buying low-cost housing and intensifies the effect of the first factor in increasing the price of low-cost housing.
3. The influx of depositors to turn their deposits into low-cost housing, which creates a bubble in low-cost housing and intensifies the effect of the first and second factors.
The message of today’s analysis is that the increase in the price of affordable housing is normal due to the first and second factors, and due to the third factor, it is temporary and short-term, and that part of the price increase due to the transitory and temporary entry of depositors was carried out in the next phase. It is withdrawn by the market and does not have a long life
In 1972 to 1975, there was a unique boom in the housing sector, and in 1977, they lost everything that the activists had gained in the housing sector.
From 1981 to 1992, those who entered the housing sector benefited greatly, and then from the beginning of 1992, those who remained in the housing sector, especially those who continued to work with bank loans, who made up at least fifty percent of bank borrowers, benefited greatly. have suffered
At least fifty percent of the economic activists who are in trouble now are those who remained in the housing sector after 2019.
Again, the housing sector has been the focus of some people to get rich since Azar 1996
Since Azar 1996, the major buyers of housing, not all of them, are not consumers, but depositors.
From December 1995 to December 1996, the depositors added to their wealth the equivalent of the salaries of 11 million employees per year, and with this money, they set off and destroy everything when they enter any market.
Those who have made deposits in small institutions and banks in 2012, their deposits have doubled in the current situation, and they feel that housing, whose price has been constant for five years and has decreased by 30% in some areas, is too cheap, which, of course, is The analysis is correct, so now is the time to convert the deposit into housing
The reason for the increase in the price of special housing for the poor and middle class is not the increase in the purchasing power of the poor and middle class, the purchasing power of these two classes has not increased compared to 2019, so that the special housing of these two classes becomes more expensive.
On average, the net profit of economic operators has passed one-third. With the net profit of economic operators being one-third, the purchasing power of people has not increased so that houses become more expensive. The main reason for the high cost of housing is the movement of deposits towards the housing sector. The cost of low-cost housing is only in limited areas. It is justified from Tehran province, which is the center of employment, some of them live in the outskirts of Tehran and their workplace is in Tehran, and some of them prefer their residence to be near their workplace, but there is a cheaper housing near the workplace. This has caused an increase in the price of cheap housing in employment centers or areas of Tehran that have smoother access to employment centers by metro, but this does not apply to many areas of Tehran province.
The process of increasing housing prices will continue, but ultimately these housings should be purchased by the final consumer, and in the case of special housing for the poor and middle class, these two groups should buy them, so at that stage, when it is decided to buy the special housing for the poor and middle If the depositor but the real consumer buys, first the transactions will decrease drastically and then the prices will fall.
Behind this housing price increase, a price fall is ahead
Risk is being transferred from home owners to depositors
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This post is written by AliVosoughi