Iran Provincial Home Sales Buck the Trend

EghtesadOnline: While Tehran’s housing market has registered three months of consecutive declines in home sales and price surges, similar markets of other provinces exhibit a different trend.

News ID: ۷۸۳۹۵۰

10 September 2018

Tehran’s housing market is on the verge of sliding back into recession after experiencing a boom phase that only lasted for nine months. Things are bad in other provinces as well, but to a much lesser degree, reports the website of Eghtesad News citing data from Donya-e-Eqtesad’s Persian newspaper.

Reviewing the volume of housing deals in cities other than Tehran and a few other major cities, especially towns with populations of under 200,000 people, shows that not only did they not experience a severe decline in the number of home deals during the past few months, they actually saw an uptick.

While Tehran’s home deals usually constituted more than half of all home deals across Iran, the city registered less than 12,000 deals during the fourth and fifth months of the current year with the total volume of deals in Iran exceeding 25,000 in this period. Monthly changes in the volume of home deals in other cities showed average upticks of 1% in those two months while Tehran’s deals declined by 10% and 5% on an annual basis, according to Financial Tribune.

According to the report, there are two major reasons behind this trend: one is the different trajectory of growth for average home prices between metropolises like Tehran and other small cities and the other is the difference in the trajectory of housing inflation and the behavior of first-time homebuyers.

The average growth trajectory of home prices in 20 provincial centers, except Tehran, reached 22% during the fifth month of the current year to Aug. 22 while this figure stood at 16% in the two preceding months. This is still a bad sign and a move toward recession, but much less severe than the 30% registered in Tehran during the fifth month and the 40% and 50% registered in Tehran during the two preceding months.

There is a notable discrepancy between monthly housing inflation for Tehran and other cities. The figure for Tehran stood at 8% at the end of the fourth month of the current year on July 22, whereas 20 provincial centers experienced 1.5-2.5% housing inflation.

First-time homebuyers were also a major factor in delaying the housing market decline in provincial centers. The total share of small town applicants in Housing Savings Account, the country’s main homeownership initiative, increased from 14% to 20% in the first two months of summer. This is while the share of Tehran residents declined to 25% from the previous 35% in the same period.