Tehran Home Prices Surge Past 16% in Q3

EghtesadOnline: Tehran home prices and deals were up in the third quarter of the current fiscal year to Dec. 21 on an annual basis, but the number of rental contracts for residential units showed a declining trajectory, the Statistical Center of Iran announced.

News ID: ۷۴۴۹۸۴

15 February 2018

In its latest report published on its website using data from the Tenement Management Information System, SCI has analyzed the price fluctuations pertaining to sales of residential units and changes in rents and rent deals in Iran's capital.

As the center reports, the average price of 1 square meter of land or residential unit stood at 52.38 million rials ($1,090) in Q3, indicating a 1.4% rise compared with Q2 and a 17.8% surge compared with the third quarter of last year.

Lowest and highest per square meter sale prices were respectively 7.2 million rials ($150) and 217.06 million rials ($4,522) while the average area of the residential units sold was 235 meters, Financial Tribune reported.

Q3 to Q2 home deals registered a 15.5% hike, but on a year-on-year basis, growth in the number of deals indicated a 49.5% surge.

Per square meter price for residential units averaged 50.73 million rials ($1,050) in the third quarter of the current fiscal year (ending March 20), meaning that the average has increased by 7.3% and 16.6% respectively when compared with the second quarter of this year and the third quarter of last year.

Lowest per square meter price for residential units stood at 5.85 million rials ($122) while the highest price reached 271 million rials ($5,645). The average area of homes was equal to 91 meters while they were 10 years old on average.

The number of deals rose by 32.6% when compared with the Q3 of last year and contracted by 3.7% when compared with the summer of the current Iranian year.

In analyzing the rent prices of residential units in Tehran, SCI reports that the average rent for 1 square meter of a home was 257,349 rials ($5.3), pointing to a respective increase of 14.8% and 2% compared with the same quarter of last year and the previous quarter.

Lowest rent per square meter was registered at 24,138 rials ($0.5) while the highest rent stood at 1.04 million rials ($21.6). The average area of rented residential units was equal to 76 meters and the average age of houses was 14 years in Q3.

However, this was the only place where the number of deals registered both annual and seasonal declines. When compared with the same quarter of last year, the number of Q3 rent deals showed a contraction of 15.7% while the number indicated a 28% decrease compared with Q2 of the current year.

More Stagnancy, But Less Bleak

As a host of officials and pundits talk of a pre-boom phase forming in the beleaguered housing sector and refer to the rising number of housing deals as the most obvious evidence, the latest forecast by the research arm of the parliament suggests that the boom might still be some distance away.

In one of its recent studies, Majlis Research Center predicted that the housing and construction sector will once again register a negative growth rate and contract by 2.4% in the current fiscal year to March 2018.

The first negative growth rate of Iran's housing sector in recent memory was registered in the fiscal 2009-10 at 4.8%. While the next two years saw a rebound when the sector grew by 2% and 5.1% respectively, the next five years–ending with the previous fiscal year– immersed the ailing sector in one of its deepest stagnant periods ever with the fiscal 2015-16 emerging as the worst year with a massive negative growth rate of 17%.

As the previous year was also very lackadaisical for the sector with a contraction rate of 13.1%, MRC's 2.4% may be analyzed as the start of a comeback that will see the sector exiting its recession cycle and seeing positive growth rates once again.

According to the research center, the persisting negative growth rate in the current year will be rooted in "the decrease in the construction expenses of the annual budget" and "the decline in investments made in other sectors of the economy".