The general price index of construction materials for residential units in Tehran rose 59.7% during the fourth quarter of the last fiscal year (ended March 20, 2019), compared with the preceding year's corresponding period.
According to the Statistical Center of Iran's latest report published on its website, the index stood at 356.4 in winter.
The figure indicates an increase of 7.7% compared with the previous quarter, which ended on Dec. 21 (autumn), when the index stood at 331.
During the 12 months ending Q4, the index grew by 47.8% year-on-year, while in the 12 months ending Q3, it had grown by 37.3%.
The category of “ironware, rebar, doors, windows and fences profile” with a price growth of 20.4% compared with Q3 and a coefficient of 18.41% gave the biggest boost to the overall index in Q4. The index for this category stood at 396.
It witnessed a price hike of 87.9% YOY and its price index grew by 81% during the 12 months ending Q4.
"Lumber" ranked second with a price growth of 14.2% compared with Q3 and a coefficient of 7.79%. The category’s index hit 506.5 in Q4, which was higher by 135.2% compared with the same quarter of the year before.
During the 12 months ending Q4, the growth rate of this category's price index was 99%.
“Electrical systems and equipment” was the third group with the biggest growth in the construction material price index in winter. In Q4, the group's index was registered at 556.4, which was higher by 10.3% compared with last year's Q3 and 106.4% YOY. In the 12 months ending Q3, the group experienced a growth of 79.8% in its price index. The category has a coefficient of 3.25%.
“Glass” with a 5.5% decline in price index and a coefficient of 1.31% was the main laggard vis-a-vis index growth. In Q4, the group's index was registered at 363.3, which was higher by 72.8% YOY. In the 12 months ending Q4, the group experienced a growth of 64.2% in its price index.
Sale on Credit
Amid the rising prices of construction materials, the Ministry of Roads and Urban Development said it is finalizing a plan to sell construction materials to major home builders on credit.
Roads Minister Mohammad Eslami said the plan will be carried out in cooperation with Bank Maskan, the state-run agent bank of Iran’s housing sector, and will be implemented as soon as it is finalized.
The plan is aimed at decreasing home prices by controlling construction costs, maintaining the quality of construction materials and controlling the inflow of money into the housing market.
“The ministry has yet to set the credit ceiling, but it will be adjusted based on the floor area of homes,” Hibna quoted Eslami as saying.
Six-Year Overview
A look at SCI data for the past six years shows that the residential construction material price index has increased in five of those years.
During the fiscal 2011-12, the index grew slightly but continuously in each quarter.
SCI uses it as the base year for its calculations, and therefore considers the index to stand at 100 during that year.
This is while the Central Bank of Iran last year upgraded its base year to 2016-17.
Next year, the index stood at 116.9 in Q2, and grew to 131.6, 145.4 and 152.9 respectively by the end of the year, indicating an annual 36.7% growth in the index that averaged at 136.7.
In the fiscal 2013-14, the Q1 index stood at 170.1 and slightly declined to 170 and 167 in the next two quarters only to rebound to 170 in the final quarter. The overall index increased by 23.8% with an annual average of 169.3.
In the following year, the index was registered at 178.1 during Q1 and it continued to rise for the next two quarters, as it reached 184.4 and 184.7 before falling to 174.9 in Q4. The year's average index was 180.5 to showcase a yearly increase of 6.7%.
The fiscal 2015-16 saw a reversal whereby the index first increased to 178.3 and 178.7 in the first two quarters, but then fell to 176.1 and 175.7 in the next two. With an average annual rate of 177.2, the index contracted by 1.8%, the only time this has happened in the six-year period under review.
The fiscal 2016-17 saw the residential construction price index rise continuously, such that quarterly figures reached 183.9, 186.6, 193.5 and 191.6. The index averaged at 188.9 during the year to register a 6.6% hike.
During the previous fiscal year, the index's growth became more noticeable as Iran's housing sector was beginning to come out of a five-year recession.
The index stood at 197.1 in Q1 and continued to rise to 211.6, 216.7 and 223.1 respectively in the next three quarters respectively. It averaged at 212.1 for the entire year to show a yearly rise of 12.3%.
