Tehran's Rent Prices Break 30-Year Record

The growth rate of rent prices in Tehran has increased by more than 55% in the first seven months of the year, breaking a 30-year record of rent increases that exceeded the annual average of 24% since 1991. Iranian media, citing official statistics, emphasized that this year's rental contracts have seen a 55% increase compared to last year, which is more than double the 'historical average of this rate.' According to the newspaper 'Donya-e-Eqtesad,' in the past four and a half years, the speed of rent increases in Tehran has outpaced the price increases of other household consumables. While the rent growth rate has reached 55%, official statistics from the Central Bank indicate that this figure was 45% and 44% in the years 2021 and 2022, respectively. The credibility of these official statistics has always been questioned by independent experts, and many believe that what is reported in official statistics diverges from reality. The increase in rent prices has been influenced by rising housing prices, which have disrupted housing market rules. In this context, 'Donya-e-Eqtesad' reported that there has been a record number of residents living in apartments of up to 40 square meters in the capital this year. The report noted that the share of 'tiny' apartments with an area of up to 40 square meters in transactions in Tehran has risen from 3.3% in 2018 to over 5.2% this year. This trend can be traced back to housing inflation, where, according to the Statistical Center of Iran, the average price per square meter of an apartment has increased from 6.2 million tomans in spring 2018 to over 80.8 million tomans in September 2023. The Research Center of the Parliament also referred to the increase in the number of households excluded from the housing market in a report this August, stating that the first to third income deciles are completely unable to secure housing, while the third to fifth and even parts of the sixth decile are 'relatively' unable to meet their housing needs. The current trend in the housing market indicates a deep and lasting crisis in this sector. In light of this crisis and the inability of a wide range of society to secure shelter, Soleh Mortazavi, the Minister of Labor of the Islamic Republic, announced on September 19 the establishment of a 'Housing Construction Headquarters' for providing housing for workers. This initiative comes despite the fact that one of the main slogans of Ebrahim Raisi's government was to build one million housing units per year, and more than two years into Raisi's administration, no homes have been delivered. Experts believe that the promise of building one million government houses was a 'populist and sensational' slogan. Economic journalist Reza Ghaibi pointed out to VOA that the construction of this many housing units annually requires a large volume of building materials, and given the production capacity and consumption levels of construction materials in the country, any increase in demand will lead to severe inflation in this sector. Ghaibi also noted the challenges of securing suitable land and drinking water, stating, 'Currently, suitable and sufficient land to fulfill this promise is not available anywhere in the country, as any new construction requires urban infrastructure and, most importantly, access to drinking water.' A member of parliament stated that housing has become inaccessible for workers and employees, while a trade official noted that the website 'Divar' has become the reference for the housing market. No one is willing to accept the government's rent ceiling; the rental market is suffering from rampant inflation. A Ministry of Roads official stated that there are 8 million tenant households in Iran. The weight of tenants has surpassed household growth; the Research Center of the Parliament reported that homelessness has intensified in eight new forms.