The annualized inflation of residential buildings in Tehran, the capital city, stood at 28.4% in the fifth month of the current fiscal year (July 23-Aug. 22), according to a new report released by the Statistical Center of Iran.
Year-on-year and month-on-month inflation reached 44% and 1.8% respectively.
The center has put average price at 451.48 million rials ($1,521) per square meter, declaring that among the capital city’s 22 districts, District 1 registered the highest average price of 854.49 million rials ($2,879) while District 17 had the lowest rate of 222.68 million rials ($750) per square meter.
The SCI data also show a total of 6,852 residential properties were sold during the month under review across Tehran, down from 8,685 in the preceding month.
District 5 saw the highest number of housing deals with 1,121, while District 19 had the lowest figure with 42.
Tehran’s real-estate market is facing a shortage of housing, as the population continues to grow.
“Paucity of housing, as a national problem, came to the fore in the mid-1960s, when the Fourth Development Plan was in force. At first, the problem sprang into existence in Tehran and some large cities as a result of the inflow of emigrants from villages but in the following decades, a large part of the country was struggling with housing shortage,” said Nasser Zakeri, an economist, in an article he wrote for the Persian daily Shargh.
A total of 6,852 residential properties were sold during the month under review across Tehran, down from 8,685 in the preceding month
“According to a report published in the fiscal 1967-68 by the Plan and Budget Organization, 40% of urban households had one room to live in and 30% had two rooms. In the 1980s, the government managed to solve this problem to a great extent through housing cooperatives. In the following decades, each government tried to resolve this worsening problem in its own approach, but the current state of the country shows those efforts were futile.”
Referring to government attempts to tackle this crisis and a series of measure taken to this effect, the economist noted that these moves have done little to solve the problem.
“Increasing the ceiling on home loans, the creation of new towns, land grants under Mehr Housing Project, reviving slums and transfer of state land to applicants were among policies taken by previous governments. Plans like streamlining rental housing market might benefit households who don’t own a home but they cannot be the permanent solution,” he said. Zakeri said resorting to such plans implies that those in charge have failed to deliver the message of Article 31 of the Iranian Constitution. The article says: Every Iranian individual and family is entitled to a dwelling appropriate to its need. The government is bound to provide this, giving priority to those whose need is greater, particularly peasants and workers.
The economist pointed to the flow of liquidity to the housing market and speculative practices as the main reasons behind the crisis.
“Money supply in our economy has increased at breakneck speed in recent decades. During recessions, when businesses are wrestling with financial hardships, a large proportion of money goes to real-estate market for lack of a better option. The formation of speculative demand in the housing market leads to a sharp increase in prices, discouraging low-income households from saving for the future. Had the economic policymakers evaluated the destructive power of speculative demand in the housing market, they would have worked out a solution on how to prevent the flood of liquidity,” he said.
Zakeri stressed that after doomscrolling the economic news of past years, you’ll understand that they never felt the apprehension of such a danger.
“They even welcomed price increases, seeing price growth as an opportunity for state-owned economic and even non-economic enterprises they were in charge of to make profit. In doing so, they bolstered the destructive power of speculative demand. Years-long business activities by banks in real-estate market and the transfer of resources to the market can testify to this reality,” he said.
