Rents Likely to Overtake Inflation

EghtesadOnline: Iran’s troubled housing sector has entered a new phase in the new Iranian year (started March 21), as it strives to put a longstanding slump behind it, although there are concerns that Iranian tenants are in for a tough year.

News ID: ۷۸۲۱۹۴

08 April 2018

According to the latest report by the Central Bank of Iran published on its website, the indicator of rents in residential units in Tehran and across the country increased by 10.5% and 9.4% respectively during the final month of last year to March 20, compared with the same month of the previous year.

This is while CBI announced the inflation rate for the entire year at 9.6% and home rent deals, usually made in the form of one-year contracts, are highly influenced by the inflation rate.

Behrouz Maleki, a housing expert, believes that home rents will increase during the first half of the current fiscal year to Sept. 22, which is the boom season for deals, Financial Tribune reported.

“After this period is over and seasonal demand and psychological pressures die down in the second half of the year, fluctuations in the residential rental market will balance out,” he wrote in his channel on the instant messaging app Telegram.

All-in-all, the pundit is of the belief that tenants should brace for a difficult year that will entail rent price hikes and fluctuating trends going against the relatively calm atmosphere of the past four years in the housing sector.

“It is predicted that the market will be a hard one for tenants, especially those living in Tehran,” he wrote. “The most probable scenario for home rents is that they will surpass the general inflation rate.”

Maleki conceded that the housing sector has many links with other sectors and markets, but maintained that even after considering the rise in liquidity, inflation, oil prices, currency rates and bank interest rates, an increase in home rents that will overtake the general inflation rate would emerge as the most likely outcome.