About the impact of this policy on housing sales it should be pointed out that rate cut creates an enthusiasm for mass builders to receive facilities for investment in housing projects.

Regarding the relationship between the housing and construction industry with more than 300 other industries and the boom that housing can make in other industries, this policy can increase product in housing market and create employment and boom in the economy. Experienced issue that exists in housing market is the impact of housing facilities increase on this market that it could strengthen housing market on the supply side. But, in the meantime several important points should be regarded particularly.

Regarding the conditions of banks in accreditation, their debt to the government, and their problems due to supportive loans to product sector obligatorily, actually considerable resources do not exist to allocate funds to this sector. It makes housing suppliers face restrictions for investment.

Rising public sector debts to banks about 91 billion dollars in 1391 has had 42.6% growth compared to 1390.  Following the impact, on the one hand, rationing of bank resources occurs to devote to the housing market and on the other hand the lack of sufficient resources to devote to the housing market will cause problems such as: bribery and corruption in the absorption of funds face banking system.

It is necessary to attend to demand for housing. According to the terms of the economic recession and significant influence of the middle class and poor of the ruling recession, the purchasing power of the large volume of applicants in the housing market has been decreased extremely. This leads to increase the tendency of housing applicants to the phenomenon of forced rental instead of buying house. One reasons for the higher supply of real demand in the current situation and the stagnation of the housing market current conditions of applicants for housing market without taking rate cut into the considerations, and this confirms that the rate cuts will not affect much on the housing market.

Regarding the effect of reducing the interest rate on housing rental market, it can be said with respect to effect of investment in stock markets, housing, currency, gold, cars and deposited in the bank on each other, indeed rate cut could reduce the attractiveness of deposits in banks and transfer resources from banks to other market. Since the market economy stagnated in the current conditions and price fluctuations have been reduced in the currency and gold markets, there is no willing to invest in this market. On the other hand housing sales market will be unattractive for investors for the reasons mentioned above. Since the rental market has an established and accepted rate of 3%, housing rental market can be a good place for investment and bank transfer of free resources and increase the supply of rental housing and change the decision of the sellers of housing to rent. On the other hand, rate cuts could change the composition of mortgage and rent in favor of the housing rental market, in the wake of it, due to the market downturn and the inability of people to pay rent, a marked decline will occur in renters who are generally middle class and low-income people.

Source: Hamshahri newspaper

Date : October 13, 2015

News Code : 6656