Decrease in Prices and Transactions in the Housing and Construction Sector

The results of the Central Bank's report on the developments in the housing market of Tehran in July of this year indicate that the number of residential apartment transactions in Tehran decreased by 25.1% compared to June 2014, reaching 11,700 units. A comparison of the apartment transaction statistics in Tehran in July of this year with the same month last year also shows a decrease of 16.5%. These figures indicate that despite the government's and Central Bank's attention to revitalize this economic sector, the housing market, at least in the capital of Iran, has remained stagnant in the first month of summer this year. According to the results of this Central Bank report, derived from the raw statistics of the Iranian Real Estate Transaction Registration System, the price per square meter of residential units sold through real estate agencies in Tehran in July 2014 was 3,860,000 tomans, which experienced a slight decrease of less than one percent (0.7%) compared to June. The average price per square meter of residential space in July of this year also faced a decrease of 3.1% compared to the same month in 2013. In another section of this Central Bank report, it is stated that in July of this year, among the 22 regions of Tehran Municipality, the highest average price per square meter of residential space was approximately 8 million tomans (7,950,000 tomans). Almost simultaneously with the publication of this Central Bank report, the Statistical Center of Iran, another authority responsible for compiling economic statistics in Iran, published its report on housing prices and rents in Tehran for the spring of this year. According to the results of this report, the average price per square meter of residential space sold through real estate agencies in Tehran during this spring reached 4,048,000 tomans, which experienced a decrease of 2% compared to the previous winter. However, the Statistical Center of Iran emphasized that this average price has increased by 3.3% compared to the spring of 2013. Considering the average inflation rate of about 15% in 2013, the real price of one square meter of residential space in Tehran has decreased. Accordingly, the number of transactions related to the sale of residential space during this spring compared to the previous season and the same season last year has decreased. The decrease in the number of residential space sales from spring last year to spring this year was 30.4%, and the number of transactions conducted through real estate agencies in Tehran this spring experienced a decrease of 23.3% compared to the previous winter. The decrease in the number of transactions emphasized in the Central Bank report for July and the Statistical Center of Iran report for the spring of this year may indicate a continuation of stagnation in the housing and construction sector in Iran. According to studies conducted, the performance of the housing and construction sector can have a 20 to 25 percent effect on Iran's economic growth, and the decrease in demand for housing and construction can negatively impact the level of investments made in this sector, which contradicts the government's policies and efforts to restore vitality to the economy.