Tehran Housing Upturn Endures

EghtesadOnline: Latest data released by the Central Bank of Iran show Tehran's housing market continues to pick up, leaving behind a long spell of inflationary recession.

News ID: ۷۴۹۷۷۲

29 February 2020

The market has been energized over the past several months, thanks to an increase in the number of home deals, according to Financial Tribune.

Prices are continuing to rise, albeit slowly compared to a few months ago, in line with the country’s overall inflation rate, which stands at 37%.

The inflation rate had been on a downtrend since a couple of months ago.

Mehdi Soltan-Mohammadi, a housing expert, told Tehran Chamber of Commerce, Industries, Mines and Agriculture in an interview that home prices have increased significantly over the past two years.

The gap between housing costs, either rents or property values, and households’ purchasing power has widened and this has led to an all-time low in the number of home deals.

However, the breakneck growth in home prices has decelerated since the fourth Iranian month (June 22-July 22, 2019).

"Many customers who feared being left out of the market decided to make purchases and home owners waiting for further price hikes have come to realize that they won’t reap more profits in the future and decided to put their properties on sale. All this has paved the way for market liquidity in mid- and downtown areas of Tehran," Soltan-Mohammadi said.

CBI Report in Detail

The CBI report shows a total of 13,264 homes were sold in Tehran during the 11th month of the current fiscal year (Jan. 21-Feb. 19) to register a 24.1% rise compared to the previous month.

The number of home sales in the capital city rose by 42% compared to last year's similar month.

The average price of each square meter of a residential unit in Tehran stood at 143.97 million rials (over $922) during the month under review, indicating a 4.3% increase compared with the preceding month.

Compared with the same month of last year, the average prices showed a surge of 44.4%.

Newly-built residential units—those up to five years old—constituted the highest proportion of deals with 43.2%, down by 1.1 percentage points compared with the same month of last year.

The lost share was added to homes with a lifespan of six to 10 years and homes with a lifespan of 16 to 20 years. Homes that were six to 10 years old and those between 16 and 20 years accounted for 18.2% and 16.3% of total deals respectively.

The share of deals houses between 11 and 15 years old decreased from 14.5% of the total deals in last year’s same month to 12.6% this year. Homes above 20 years posted a share of 9.6% of total deals, compared with 9.7% of the same month of last year.

The distribution of the dealt properties shows that among Tehran's 22 districts, District 5 grabbed the highest share of total deals at 17.1%. It was followed by districts 2 and 4 with a respective share of 9.7% and 9.2%.

All-in-all, 10 districts (one, two, four, five, seven, eight, 10, 11, 14, and 15) grabbed the lion's share of the deals at 74.6% with the remaining 12 districts holding a 25.4% share.

Among Tehran's 22 districts, District 1 registered the highest average home price of 285 million rials ($1,826) per square meter. District 18 offered the capital city's cheapest homes with an average per-square meter price of 71.6 million rials ($459). These figures show a respective increase of 30.7% and 58% YOY.

Residential units with an average price range of 90 million rials ($577) to 105 million rials ($673) per square meter were the highest in demand, as they grabbed 10.5% share of all deals.

They were followed by units priced at 105 million rials to 120 million rials ($769) per square meter and those priced at 75 million rials ($480) to 90 million rials per square meter with a share of 10.2% and 9.7%, respectively.

From the total number of deals, 56.4% belonged to homes cheaper than the average per-square meter price of the city (i.e. 143.97 million rials or $923).

Residential units with a floor area of 50 to 60 square meters registered the highest number of deals with a 14.5% share of total deals.

Units with an area of 60-70 square meters and 70-80 square meters came next with a respective share of 14% and 12.1%, respectively. All-in-all, units lower than 80 square meters had a 53.4% share of total deals.

CBI data further show that homes in Tehran worth between 4.5 billion rials ($28,846) and 6 billion rials ($38,461) were highest in demand with an 11.7% share of total deals.

Homes with price tags of between 3 billion rials ($19,230) and 4.5 billion rials and those between 6 billion and 7.5 billion rials ($48,076) came next with a respective share of 11.4% and 9.9% of total deals. Collectively, homes valued under 10.5 billion rials ($67,307) had a 52% share of total home deals.

11-Month Perspective

During the 11-month period ending Feb. 19, the number of home deals in Tehran totaled 73,359, showing a 35.6% decline on a year-on-year basis.

In the same period, the average price of each square meter of a home in the capital stood at 130.18 million rials ($834), signaling a year-on-year surge of 63.5% compared with the 11-month period of last year.

Tenancy in Urban Areas

The central regulator also reported changes in tenancy prices in the capital and across the country.

According to CBI, the price of rented residential units in Tehran and across all urban areas in Iran increased by 29.4% and 31.5% respectively during the 11th month of the current year compared with the similar month of last year.