92% Increase in Housing Prices in Tehran Over One Year

The average price of buying and selling each square meter of residential units in Tehran reached 9 million and 550 thousand tomans in December this year, showing an increase of about 92% compared to December last year. According to the Central Bank of Iran, the number of transactions for residential apartments in Tehran in December 2018 decreased by 61.7% compared to the same month last year. Based on the report on the housing market developments in Tehran, derived from raw statistics from the national real estate transaction registration system, the average price of one square meter of residential space in the capital reached 7 million and 537 thousand tomans in the last 9 months of 2018, marking a 64% increase compared to the same period last year. Meanwhile, in these three quarters and until the end of autumn this year, the number of transactions in Tehran reached 97 thousand and 920, which is about a 26% decrease compared to the number of residential apartment transactions in the same 9 months last year. The continuing upward trend in prices alongside the decrease in the number of transactions indicates the persistence of inflationary stagnation in the housing market of the capital, which has been consistently present in recent months. However, statistics from the Statistical Center of Iran regarding the housing and construction market in urban areas released recently show that the inflationary record in Tehran's housing market cannot be generalized to all cities in Iran. According to the report from the Statistical Center of Iran, the average price in this season compared to last summer saw a growth of 44.4%, while the number of transactions for residential spaces in this season also experienced a growth of about 16% compared to last summer. Other results from the report on housing market transactions in Tehran in December 2018 include changes in rental prices in the capital. In December this year, the rental price index in Tehran and across urban areas in Iran increased by 19.2% and 16.2%, respectively, compared to the same month last year. The report specifies that units built within the last 5 years accounted for 43.4% of all residential transactions in the capital. Additionally, in December this year, among the 22 municipal regions of Tehran, region 5 was the most active area, with over 14% of transactions related to apartments located within this municipal area. The highest average price per square meter of residential space in Tehran in December this year was in region 1, reaching 21 million and 810 thousand tomans. The cheapest municipal region in Tehran in December this year was region 18, where the average price per square meter of residential space reached 4 million and 200 thousand tomans. The government of Hassan Rouhani is trying to stimulate the Iranian economy by supporting the housing and construction sector and increasing activities in this sector. About 20 days ago, Hassan Rouhani, the President of Iran, asked his new Minister of Roads and Urban Development to 'compensate for the backlog in the housing sector as expected by the President.' Habibollah Taherkhani, Deputy Minister of Roads and Urban Development, mentioned in a television program on Wednesday night the plan to produce 400 thousand housing units annually by the end of 2020. According to Taherkhani, 'We will provide the most influential factors affecting housing prices, namely free land and building permits, to builders, and this collaborative model is entirely feasible, which some developers have welcomed.' According to the comprehensive housing plan, Iran needs about one million housing units annually, but due to the housing recession, the private sector has lost its motivation for production in recent years. Currently, based on the number of issued permits, the annual production through the private sector is between 300 to 400 thousand housing units.