The rental price is directly influenced by various economic factors such as inflation rates, exchange rates, housing prices, and bank interest rates.
As these factors fluctuate, so too does the rental rate, often resulting in shifts in the balance between rental costs and mortgage payments.
For instance, a decrease in the value of the national currency coupled with an increase in the dollar rate typically leads to a rise in rental prices while reducing the portion allocated to mortgage payments.
The significant issue currently impacting Iran’s rental market in 2024 is the recent exchange rate fluctuations.
In the first three months of 2024, the dollar rate surged from 50 thousand tomans to over 61 thousand tomans, representing a considerable increase of more than 11 thousand tomans. This abrupt change has reverberated across all markets, including the rental sector.
Saeed Lotfi, Secretary of the Real Estate Consultants Union of Tehran Province, commented on the state of the housing rental market in spring 2024 and the ensuing relocation season, noting the inevitable repercussions of the escalated dollar rate.
He emphasized that when exchange rates rise, housing prices follow suit, consequently influencing rental rates, as they are closely tied to property values.
In addition to exchange rate fluctuations, other macroeconomic factors also play a crucial role in shaping the rental market landscape.
Lotfi pointed out that during economic downturns, landlords often increase rents in a bid to maintain their purchasing power, despite the strain this places on tenants.
Consequently, households may resort to relocating to less affluent areas annually, contributing to the densification of marginalized populations.
Presently, a significant portion of household income is allocated to housing expenses, with housing costs occupying a larger share of the expenditure basket.
Addressing this issue necessitates a multifaceted approach, including bolstering housing production, augmenting market supply, and enhancing economic indicators to improve purchasing power.
During his presidential campaign, Ebrahim Raisi pledged to construct one million housing units annually. However, three years have elapsed since then, and like many of the regime’s promises, this commitment remains unfulfilled.
This chronic cycle of unmet promises has become all too familiar for the Iranian populace, transcending political affiliations.
Iranians have grown accustomed to empty rhetoric devoid of tangible actions, fostering a sense of disillusionment and frustration.
The Central Bank of Iran recently disclosed that the average price per square meter of residential units in Tehran surpassed 81 million tomans in March 2024, marking a 3.8% increase from February and a staggering 24% surge from March 2022.
Despite this surge in prices, the number of residential units traded in Tehran decreased slightly compared to the previous month and the corresponding period last year.
Farshid Pourhajat, Secretary of the Mass Housing Builders Association, highlighted the pressing challenges confronting the housing market, particularly the growing demand from over 13 million young adults seeking accommodation.
Additionally, Pourhajat underscored the substantial deficit of approximately 6.7 million housing units nationwide, emphasizing the imperative of private sector involvement in addressing this shortfall.
Regrettably, Pourhajat lamented the lack of concerted efforts from both the private sector and the government to tackle this housing crisis.
He criticized the opaque decision-making processes conducted behind closed doors, which often yield unfavorable outcomes.
Furthermore, Pourhajat bemoaned the structural inefficiencies within the banking system, citing the failure to enforce legislative mandates aimed at channeling bank resources towards housing and construction initiatives.
Despite parliamentary approval, the disconnect between governmental directives and banking practices persists, exacerbating the housing shortage and perpetuating the cycle of unmet promises.
