Credit policies and housing prices: Case study of selected provinces in Iran

Effective functioning of the housing market requires access to long term financing. In fact, the cost of buying or building housing several times annual household incomes are over. They usually meet this cost savings as a need for long-term borrowing to finance housing is necessary. In this study we investigate the effect of banking facilities in the center of the housing price index in selected provinces in Iran. Panel data methods (panel) between years (1991-2011) and related models have been used. Indices of nominal household income and mortgage banking facilities as demand side factors. The index of production in construction and housing price index for goods and services as supply-side variables were entered into the model. Among the indices, the price index of goods and services between the housing sectors has the greatest effect on house prices in the selected cities. With the increase in nominal household income, the amount of banking facilities and housing price index for goods and services, housing, housing prices increased in Tehran. The model suggests that the supply of residential units (number of buildings produce in years) is negatively correlated with housing prices.