The Statistical Center of Iran has published its latest figures on the number of building permits issued in the country.
The new data show the number of permits issued during the fourth quarter of the last fiscal year that ended on March 20, 2019, increased significantly both compared with the preceding quarter (Sept. 23-Dec. 21, 2018) and the same period of the year before.
According to SCI, 114,614 building permits were issued by municipalities in Iran’s urban areas in Q4, indicating a 50.1% increase compared with the previous quarter and an increase of 23.9% when compared with the corresponding quarter of last year.
The average number of residential units to be built as part of each permit issued in Iran stood at 2.5 and the average floor area of units per permit was 466 square meters.
In the capital city, 18,953 building permits were issued by Tehran Municipality in Q4, indicating a quarter-on-quarter growth of 12.5% and a year-on-year increase of 25.4%.
The average number of residential units per permit issued in Tehran was 7.1.
In Tehran, the total floor area of units in each permitted building in Q4 was at 3,552,000 square meters, registering a 5.4% rise quarter-on-quarter and a 29.8% increase year-on-year.
The average floor area of units per permit was 1,329 square meters.
Housing Market Bracing for Stagflation
The increase in the number of building permits come as, according to Fardin Yazdani, the Comprehensive Housing Plan’s deputy for research, Iran's housing market is bracing for inflationary recession amid a widening home supply deficit.
Referring to increasing home prices of late and a decline in the number of home deals, Yazdani noted that the main reason for this is that the housing sector has failed to boost production.
"In other words, despite strong demand in the housing market over the past year, the supply side has failed to catch up," he was quoted as saying by the news service of the Ministry of Roads and Urban Development.
According to the Statistical Center of Iran, the average price of each square meter of residential floor area surged by 59.8% during last year’s Q4 on a year-on-year basis. Compared with the previous quarter, prices indicated a growth of 11.5%.
The minimum price of each square meter of residential floor area across urban areas during last year's Q4 stood at 864,000 rials ($7.38), with the maximum price registered at 570.98 million rials ($4,880). The average price was about 29.26 million rials ($250).
In terms of the number of deals for residential floor areas, the last year’s Q4 saw a decline of 16.6% compared with the Q4 of the year before. Against the Q3 of last year, the number of such deals registered an increase of 10.3%.
SCI put the average dealt floor area at 110 square meters while putting the average age of residential units at 11 years.
High Price of Land, Construction Materials
Yazdani referred to the high price of land and construction materials as the main reason for the lack of housing production.
"Under the circumstances, builders are not finding the housing market as lucrative as other markets," he said.
According to the SCI report, the average price of each square meter of land (vacant) or land of a rundown residential property (residential units that are considered old to a degree that only the underlying land is useful for construction) in Iran went up by 121.9% in Q4 compared with the corresponding period of the year before. Prices increased by 36.6% compared with Q3 or the autumn of fiscal 2018-19.
The minimum price of each square meter of land or land of a rundown property in the country stood at 502,000 rials ($4.29) while the maximum was at 638.4 million rials ($5,456), bringing the average to 28.65 million rials ($244).
The number of land deals made during the last Iranian year’s Q4 increased by 28.6% compared with the similar period of the year before and 18.8% when compared with the third quarter of last year.
The average area of each dealt land or land of a rundown property in real estate agencies across Iran was reported at 264 square meters by SCI.
The construction material price index for Iran's capital city, Tehran, stood at 313.4 in the last Iranian year (March 2018-19) to register a 47.8% increase compared with the year before.
According to SCI, the index stood at 212.1 in the year ending March 20, 2018, indicating a 12.3% increase compared with previous year.
The index posted increases in all four quarters of last year, with the sharpest quarter-on-quarter growth registered in summer (the second quarter that ended on Sept. 22, 2018) at 25.7%.
The index for summer had an increase of 49.1% compared with the second quarter of the previous year.
The category of “bituminous waterproofing, bitumen and asphalt” with a price growth of 124.8% compared with the year before gave the biggest boost to the overall index last year. The index for this category stood at 463.3.
Yazdani believes the current inflationary recession in the housing market will continue, although rising home prices will lose momentum in the months to come.
"Should the supply of homes catch up with demand, we can expect the market to find balance," he concluded.
