Housing Market

Since the housing sector has an intricate relationship with other sectors of the economy, fluctuations in the price can be costly. Also, rising prices are either rooted in the underlying conditions of the economy or simply caused by the bubble, leading to different policies. Therefore, house price bubble can be considered as an early warning system to prevent adverse economic consequences. The present paper applies the theory of rational expectation bubble in the Iranian housing market during the years 2006-2020 using the Blanchard and Watson model. The theory implies that negative returns on house prices are less likely to occur if the bubbles exist. The risk assessment is, however, estimated by linear logistic function. The existence of bubble in housing market is confirmed based on 30 provinces.

Like other economic markets, housing market is comprised of supply and demand dimensions and equality of supply and demand makes the housing market balanced. The aim of this paper is to investigate the characteristics of housing market of Tehran city and some deficiencies of this market with fundamental – applied methodology. The variable studied here is the saleable residential unit with minimum 50m2 area which is obtained after statistical evaluations of housing price for many years and estimation of the loans and deposit of families in different income levels. Results reveal that problems of housing market can be attributed to lack of appropriate planning in housing building and supply (in quantity, area and geographic location), decreasing purchasing power of people various income levels as a result of misfit of increase in income and price of housing, low demand of families and finally, limited income groups for purchasing appropriate housing.