Housing Market Recession in Iran; Despite Rising Dollar Rates, 'There Are No Buyers for Housing'

According to reports from economic sources in Iran, the recession in the Iranian housing market has intensified, with real estate consultants reporting a decrease in visits and a lack of pre-holiday activity. Studies show that buyers with limited budgets are turning to smaller, older units and even ground-floor apartments. For instance, the newspaper Donya-e-Eqtesad reports that apartments priced under four billion tomans are mainly offered in the eastern and southern regions of Tehran, with sizes ranging from 30 to 80 square meters. For example, a 75-square-meter unit built 30 years ago in the Festival neighborhood is priced at three billion tomans. In this context, the Vice President of the Tehran Real Estate Consultants Union states that due to the 'depth of the recession' in the housing market, there are no buyers even with the rising dollar rate. Davood Beiginejad told ILNA news agency on Tuesday, December 3, that the number of sales listings with real estate consultants has significantly increased, but market activity is not driven by 'demand' and does not lead to contract signing. According to this industry official, housing applicants only inquire about prices at real estate agencies without making purchases. The share of housing in Iran's bank loans is only 2.5%. Mr. Beiginejad believes that the 'decrease in people's purchasing power' and 'reduction of liquidity in the market' have diminished housing transactions. He states, 'Most contracts and transactions are barters; that is, they must sell an asset to be able to make a transaction in the housing market.' The Vice President of the Tehran Real Estate Consultants Union notes that although the rising dollar rate has increased construction costs and the final price of housing, prices have not changed due to the 'lack of buyers.' The dollar rate in the free market has been on an upward trend in recent months and has now crossed the 78,000 tomans mark. Iranian markets traditionally react to the rising dollar rate, but after the dollar price increase, housing transactions remain stagnant. Meanwhile, other investment markets in Iran, such as stocks and gold, have grown alongside the rising dollar rate. The purchasing power of housing loans has decreased due to ongoing inflation in recent years, and other government schemes like 'National Housing' have also remained ineffective. Gholamreza Mirzaei, a representative from Boroujen in the Islamic Consultative Assembly, stated on December 2 during a warning to the Minister of Roads and Urban Development that 'having a home has become a dream for people' and said, 'National Housing has not achieved its goals.' The increasing risk of military confrontation between Iran and Israel, along with security and political developments in the Middle East, has also directed liquidity holders towards less risky markets like 'currency and gold,' exacerbating the housing recession.