Home prices have registered a 200% growth over the past five years, said Parvaneh Aslani, director general of Housing Economy Office of the Ministry of Roads and Urban Development, adding that such a considerable rise in prices has been registered for other consumer goods and assets as well.
The reference for measuring home prices is what actually happens in the real-estate market and deals that are being registered in the Tenement Management Information System (the so-called Tracking Code System) operated by the ministry. Extreme values are omitted and the average price is being calculated.
“So far, only prices of homes in Tehran were regarded as reference for calculating the value of housing deals but in the new reports of the ministry, statistics of home deals in District One and District Three were removed. As a result, home prices decreased by 100 million rials [$385],” Aslani was quoted as saying by IRNA.
Noting that District One offers the highest prices in Tehran, the official said, “Prices of homes in other districts were set according to the prices in District One and that would have a psychological impact on public perception.”
“Annual demand for homes stands at 700,000 units in urban areas and 200,000 units in rural areas. However, municipalities issue an average of 300,000-350,000 permits annually, of which 70-75% lead to construction,” she said.
“In recent years, the profit margin of investment in real-estate development has been smaller than other markets, including foreign currency exchange market and stock market. For example, over the past 10 years, the profit margin of stock market was 51% whereas that of housing market stood at 26%. In fact, housing market was the least profitable market in terms of price growth.”
The official said there is at least a waiting period of 2-2.5 years before investments in the property development market generate a return, because of which investors have moved to to markets other than the housing market in the short- and medium-term.
Estimates show the real output of the housing market is 270,000-280,000 units per annum, she added.
Average Home Price Put at $584 per sqm
The average price of each square meter of a residential property in Iran stood at 152 million rials ($584) in the month ending Nov. 20, says Mahmoud Mahmoudzadeh, the head of Housing Department of the Ministry of Roads and Urban Development.
“In summer, the department decided to stop publishing statistics regarding the real-estate market in Tehran because it believes that having the average home price in Tehran as a reference would affect prices in other provinces whereas prices in the cities of a province should be compared to the capital city of that province [and not Tehran],” he was quoted as saying by Mehr News Agency.
Mahmoudzadeh noted that at present, statistics on home deals of all provincial capital cities have been prepared and the average price of each square meter of a residential property in 25 provincial capital cities is below 100 million rials ($384).
He added that the median home price of nine provincial capital cities is less than 50 million rials ($192) and only in Tehran and Ahvaz, the average price of each square meter of home exceeds 200 million rials ($769).
“Tehran home prices stood at 278 million rials [$1,069] and Ahvaz at 235 million rials [$903] per square meter during the month ending Nov. 20. High demand has driven up home prices in the southern city of Ahvaz; it has become popular with foreign national buyers in recent months, although it was not an expensive city in the past,” Fars News Agency quoted him as saying.
The most expensive city in Iran, given the home prices, is Tehran and the cheapest is Yasuj with 32 million rials ($123) per square meter last month.
He put the median home price per square meter in Shiraz at 114 million rials ($438); Isfahan at 111 million rials ($426); Ilam at 40 million rials ($153); Birjand at 42 million rials ($161); Bojnurd at 45 million rials ($173); Kermanshah at 46 million rials ($177); and Arak and Zanjan at above 100 million rials ($384).
On home prices in Tehran in dollar term, the official said, “The highest average home price in dollar term in Tehran over the past 15 years was registered in the year ending March 2009 with $2,244 per square meter. This comes as the average price of each square meter of a residential property in Tehran stood at $1,051 at the rate of 250,000 rials per US dollar last month, i.e. half the price it was in the year ending March 2009.”
Noting that housing expenses accounted for 36% of households’ budget in the year ending March 2020, Mahmoudzadeh said, “Home prices increased from 12 million rials [$46] in the year ending March 2010 to 278 million rials last month.”
CBI Report
Latest data published by the Central Bank of Iran show 4,466 homes were sold in the capital during the eighth month of the current fiscal year (Oct. 22-Nov. 20), registering a 48.4% decline compared with the preceding month but a 9.9% growth compared with the same month of last year.
The average price of each square meter of a residential property in Tehran stood at 271.93 million rials ($1,045) during the month under review, showing a surge of 118.2% over last year’s same month as average prices were registered at 124.63 million rials (about $480) then. Home prices in the capital city increased by 1.8% compared to 267.2 million rials ($1,027) in the seventh month of the current year.
During the first eight months of the current Iranian year that started on March 20, the number of home deals finalized in Tehran totaled 68,043, which shows a 70.7% rise year-on-year.
In the same period, the average price of each square meter of a home in the capital stood at 216.79 million rials ($833), signaling a YOY surge of 70.9% compared with the eight months of last year.
The central regulator also reports changes to tenancy prices in the capital city and across the urban areas.
According to CBI, the price of rented residential units in Tehran and across urban areas increased by 28.7% and 31.9% respectively during the eighth month of the current year compared with the similar month of last year.
