Tehran Housing Sales Slump to 6-Year Low

EghtesadOnline: The number of housing sales in the capital city, Tehran, during the month ending Aug. 22 slumped 74.3% compared with the same period of last year to a six-year low of 3,368, the news outlet of the Ministry of Roads and Urban Development reported.

News ID: ۷۴۸۲۸۵

28 August 2019

A total of 13,120 home deals had been signed in the fiscal month of July 23-Aug. 22.

Latest figures released by the Planning and Housing Economy Office of the Ministry of Roads and Urban Development also show the average price of each square meter of a residential unit in Tehran stood at about 131.87 million rials ($1,177) during the fifth Iranian month (July 23-Aug. 22), showing a 77.5% increase compared with the same month of previous year.

Each square meter of homes in the capital city were sold at an average of 74.3 million rials ($663) in the fiscal month of July 23 to Aug. 22, 2018, Financial Tribune reported.

The distribution of the deals shows that among Tehran's 22 districts, District 5 grabbed the highest share of total deals with 367 and District 22 had the lowest number of deals with 24.

Among Tehran’s 22 districts, District 1 registered the highest average home price of 292.12 million rials ($2,608) per square meter, whereas District 12 offered the capital city's cheapest homes with the average per-square meter price standing at 72.11 million rials ($643).

The report also shows that in the four months ending July 22, the number of home deals, their value and the number of construction permits issued were down 54.9%, 12.5% and 21%, respectively, whereas the average price of each square meter of residential floor area was up 98.2% year-on-year.

During the same four-month period, each square meter of homes in Tehran was sold at an average of 128.7 million rials ($1,149) compared with 64.95 million rials ($579) of last year’s similar period.

Inflationary Recession

Iran's housing market is bracing for inflationary recession amid a widening home supply deficit, according to Fardin Yazdani, the Comprehensive Housing Plan’s deputy for research.

Referring to the rise in home prices of late in line with a decline in the number of home deals, Yazdani said the main reason for this is that the housing sector has failed to boost production.

"In other words, despite strong demand in the housing market over the past year, the supply side has failed to catch up," he was quoted as saying by the news service of the Ministry of Roads and Urban Development.

The Statistical Center of Iran's latest report shows the average price of each square meter of residential floor area surged by 59.8% in last year’s Q4 on a year-on-year basis. When compared with the previous quarter, prices indicated a growth of 11.5%.

The minimum price of each square meter of residential floor area across urban areas during last year's Q4 stood at 864,000 rials ($7.4) with the maximum price registered at about 570.98 million rials ($4,900). The average price was about 29.26 million rials ($251).

In terms of the number of deals for residential floor areas, the last year’s Q4 saw a decline of 16.6% compared with the Q4 of the year before. Against the Q3 of last year, the number of such deals registered an increase of 10.3%.

SCI put the average dealt floor area at 110 square meters while putting the average age of residential units at 11 years.

Groundbreaking for Construction of 110,000 New Homes

President Hassan Rouhani marked the construction project of 110,000 homes of the so-called “National Initiative to Build and Deliver Homes” on Tuesday.

Nearly 20,000 of these residential units will be constructed in new satellite cities, including 7,134 in Fooladshahr in Isfahan Province, 4,448 in Parand in Tehran Province, 2,762 in Golbahar in Khorasan Razavi, 1,547 in Sahand in East Azarbaijan Province, 1,497 in Sadra in Fars Province, 800 in Amirkabir in Markazi Province, 520 in Hashtgerd in Alborz Province and 150 in Pardis in Tehran.

Of the total of 400,000 homes planned to be constructed as per the Roads and Urban Development Ministry’s initiative, New Towns Development Company will build 200,000, the Urban Development and Renovation Company 100,000 and the Housing Foundation of the Islamic Republic of Iran will build the remaining 100,000 residential units over three years, Fars News Agency reported.

With the planned construction of 13 towns by New Towns Development Company, the number of Iran's satellite towns will reach 30.

Currently, a total of 17 satellite towns have been created in 11 Iranian provinces.

The optimal population of the satellite towns is estimated to be 3.8 million residents, however, currently almost 80% of their capacity remain unused.

The estimated population of first-generation residents of new towns was put at 280,000 in March 2006-7, 420,000 in March 2011-12 and 776,000 in 2016-17.

New towns have experienced an 8.8% population growth between the fiscal 2006-7 and 2011-12 and 12.6% between the fiscal 2011-12 and 2016-17.

Their population is estimated to have increased to 1.3 million in the fiscal 2021-22 and over 2.5 million in the iscal 2026-27.