Statistical Center Report: Recession in Iran's Housing Construction Market Continues

The number of building permits issued by municipalities in Iran in spring 2016 experienced a decrease of approximately 11 percent compared to the same season last year. The report from the Statistical Center of Iran indicates that the recession in the housing construction market in Iran continues. According to this report, the number of building permits issued in Iranian cities in spring 2016 was over 31,000, which represents a decrease of more than 17 percent (17.4 percent) compared to the number of permits issued in the previous winter. The total area of the building permits issued during this period also showed a decrease of 5.5 percent compared to winter 2015. This decline in the area considered in the building permits issued in spring 2016 compared to the same season last year reached 7.7 percent. The report also specifies that the municipality of Tehran issued nearly 1,800 building permits in spring 2016, which is a decrease of approximately 20 percent (19.7 percent) compared to the same season last year and a decline of nearly 1 percent (0.9 percent) compared to winter 2015. This number of building permits issued by the Tehran municipality accounted for 5.6 percent of the total building permits issued across Iran. Although the number of permits issued by the Tehran municipality in spring 2016 decreased compared to the same season last year and the previous season, the total area designated in the permits issued in spring 2016 showed an increase of 5.6 percent compared to the same season last year. This area considered compared to the total area designated in permits issued in winter 2015 shows about a 44 percent increase. In another section of this report, the building permits issued in spring 2016 are categorized by building usage. Accordingly, the number of residential units anticipated in the permits issued for construction in spring 2016 was nearly 82,000 units, which represents a decrease of about 11.7 percent compared to the previous season and about 12 percent compared to spring last year. The figures in this report from the Statistical Center of Iran, corresponding to the spring of this year, indicate a continued relative recession in the construction sector and may convey the message to market participants that the outlook for supply and construction in the coming months may not be very promising. Previously, the Central Bank had emphasized in a report on the housing and construction market in Tehran that the volume of transactions in the housing and construction market of the capital in October of this year had also declined. These statistics from the housing and construction sector in Iran come at a time when the government of Hassan Rouhani and the Central Bank have implemented policies and programs in recent months aimed at stimulating housing demand and revitalizing this market. Introducing new financial instruments such as the secondary mortgage market, reducing interest rates on housing loans for first-time buyers, facilitating smoother loan flows in this sector, and allowing all banks to offer housing purchase loans are among these government policies and programs. The development of a pre-sale housing system, the establishment of housing guarantee funds, and land and building funds are other approaches of decision-makers and planners in the government to revitalize the housing and construction sector. Peyman Ghorbani, the economic deputy of the Central Bank of Iran, spoke on Wednesday about improving signs in the housing sector but emphasized that this sector still requires special attention. The housing sector is important for the government and the Central Bank because a boom in this sector can activate a chain of related industries and services, which is said to include up to 500 links and chains of industries and services.