Central Bank of Iran Reports 11% Increase in Housing Prices in Tehran

The Central Bank of Iran announced an 18.5% increase in home sales in November of this year compared to the same month last year, stating that during this period, housing prices in Tehran also rose by an average of about 11%. According to the IRNA news agency on Tuesday, December 6, the number of residential apartments sold in Tehran reached 14,800 units, marking an 18.5% increase compared to the same month last year. The average price of buying and selling one square meter of residential units in Tehran during November was 4,890,000 tomans, which represents a 10.9% increase compared to the same month last year. The average price per square meter also increased by 2.1% compared to October. In the first eight months of the year 1396 (2017), the number of residential apartments sold in Tehran reached 113,800 units, a 7.7% increase compared to the same period last year. During this time, the average price per square meter of residential units in Tehran was 4,650,000 tomans, which is a 7.1% increase compared to the same eight months of the previous year. The construction sector is considered one of the most important economic sectors in Iran, where stagnation and growth in this sector can impact the entire Iranian economy. This sector has faced stagnation in recent years, and the government's and Central Bank's policies to stimulate this area have not had a significant effect. Meanwhile, Mohammad Reza Pourabrahimi, head of the Economic Commission of the Parliament, predicted that the housing sector would gradually recover this solar year. According to Mr. Pourabrahimi, the existing stagnation in the housing market is influenced by the overall economic situation in Iran and oil prices, and until oil revenues increase, investment in the housing market will not flourish. Hassan Mohtasham, a member of the Builders Association, also stated that the stagnation in the housing market over the past four years has occurred due to the government's contractionary policies aimed at reducing inflation to single digits, and this stagnation will not improve in 1396. Meanwhile, Ahmad Alavi wrote on October 12 in a note for Radio Farda that the revival of the Iranian housing market is conditional on an oil boom and the government's expansionary policies in injecting money and credit through banks into the housing market. He emphasized that the deep stagnation in the Iranian housing market is the result of factors that have shown signs for nearly six years and are still present. According to Mr. Alavi, the most important factor in this context is the decrease in demand due to reduced purchasing power of the people and the bleak outlook for economic growth, which has severely contracted the housing market. According to the Central Bank of Iran's report in November, rental prices in Tehran increased by 9.6% compared to the same month last year. Rental prices in other cities of Iran also increased by 8.5% compared to last November. Housing costs account for the largest share of the Iranian household expenditure basket. According to an article published in Radio Farda in collaboration with the Open Data Iran database on February 1, 2017, the average share of housing rental costs and related services such as water, electricity, and gas in the expenditure basket of an average household in urban areas of Iran increased from about 27% in 2005 to 35% in 2015.