The Iranian housing market continues to set new records every month, with this month witnessing record-breaking price increases.
In October, the housing market experienced its highest monthly inflation to date. According to the state-run website Donya-e Eghtesad, in October of this year, the monthly rent inflation, based on changes in the country’s housing rental price index, reached 4.3%, marking the highest monthly housing rental inflation since October of the previous year.
This report highlights that during the first half of this year, housing rent inflation reached the highest annual growth in the past 12 years. In the first six months of 2023, the average rent growth in Iran surpassed the average annual rent growth of the past 12 years.
Furthermore, the highest monthly inflation in the housing market has been recorded since October of the previous year.
Monthly housing rent inflation in the country reached 4.3% in October, compared to 3.5% in September and 3.3% in August. In July and June, each of these months saw monthly inflation of about 2%.
The point-to-point inflation of housing rent, based on changes in the rent price index, was recorded at 39% in October this year, representing a 0.4 percentage point increase compared to September’s point-to-point inflation of 38.6%.
Meanwhile, the Housing Accessibility Index has been a key indicator in the Seventh Plan bill. This index estimates the number of years a person needs to save their entire income to afford a 75-square-meter house.
According to the Seventh Plan Housing Accessibility Index, it is projected that the waiting time for purchasing housing will decrease by 12 years by the program’s end.
This figure might sound like a dream and quite unattainable, especially considering previous reports stating that the waiting period for owning a house in Tehran was around 90 years for an ordinary employee.
In 2014, the average price per square meter of housing in the entire country was about 1.4 million tomans. If a family were to save their entire annual income, they could afford 19.4 square meters of housing.
However, in 2021, housing prices experienced a sharp increase, reaching an average of 11.808 million tomans per square meter nationwide, while incomes remained low, allowing people to purchase only 9.5 square meters of living space with their annual income. By October 2022, with further housing price hikes in Tehran, the average price per square meter exceeded 55 million tomans.
This meant that Iranian families could afford just 1.1 square meters of housing per year after covering expenses, a decrease from about 1.7 square meters in 2021. In 2023, this figure dropped to less than 1 meter, making it clear that even with an 8 million toman salary from the Ministry of Labor, many people would not be able to afford a minimum-sized house even after a century.
In another part of its report, Donya-e Eghtesad points out that the persistent and successive record-breaking inflation in the housing rental market not only makes life increasingly difficult for tenants, particularly in terms of proposed rental price levels, but it also blurs the traditional distinction between general inflation and housing rent inflation.
The Statistical Center of Iran’s report for September 2023 indicates a 3.4% inflation in housing prices during that month, with point-to-point inflation in this sector reaching 38.7%.
Annual housing price inflation stands at 37.3%. Monthly rent inflation is equal to housing price inflation at 3.4%, with monthly inflation at 38.7% and annual inflation at 37.1%. Presently, a significant portion of the Iranian population is spending over 70% of their monthly income on housing, while the prospect of owning a house remains distant.
This is despite the fact that the housing market has been stagnant for a prolonged period, with sales and construction activity reaching an unprecedented low. Mehdi Ravanshadnia, an expert in the housing market, explains that in 2016, the average price in Tehran’s most expensive district, District 1, was five times that of the cheapest district in the city.
However, the latest Statistics Center report shows that this gap has been reduced to three times. According to him, recent years have witnessed a shift in demand towards less expensive areas, resulting in a decreased price disparity between the northern and southern areas of Tehran.
