Central Bank of Iran’s data show that rentals during the month ending February 19 increased by 10.1% in Tehran and 11.3% in other cities compared to the same period last year, respectively.
In its ‘Trends in Tehran Real Estate Deals’ report it said the surge in rentals was in keeping with the rate of inflation and prices “were influenced by the CBI’s disinflationary policies.”
The average price per square meter of a typical residential unit in Tehran reached 39.2 million rials ($1,293) last month, marking a 3% increase compared to the previous month. However the prices are down 1% in comparison with the same period last year.
During the period, 16,434 home deals were made in the capital, a growth of 5.7% year-on-year and 0.7% month-on-month. However, the total number of home deals during the first 11 months of the fiscal year (March21-February19) reached 141,500; a 10.5% drop compared to the same period a year before.
The report also details the frequency of housing deals based on prices, with homes below the average price (39.2 million rials a meter) accounting for 61.4% of the total deals.
CBI’s data shows that houses less than 80 square meters were the most popular with buyers and accounted for 56.8% of the total deals. Moreover, houses built in 2010 onwards accounted for 56.7% of the total purchases.
Impact of Rate Cuts
Meanwhile head of Tehran Realtors Association, Hesam Oqbaei, forecast a semblance of stability in rents following this month’s cut in bank deposit rates.
“Even though home prices have remained almost unchanged for almost two years, rents have been rising mainly because landlords normally end to compare rentals with the returns on their bank accounts,” he was quoted as saying by Fars News Agency.
Earlier this month, the Money and Credit Council required banks to lower their one-year deposit rates from 20% to 18%, while the overnight deposit rate was cut to below 10 %.
“Lower deposit rates will help stabilize rentals as of next year,” said the realtor.
Meanwhile, Albert Boghazian, an economist, says the cut in deposit rates will likely result in higher rentals. “Housing market trends in previous years show that any change in deposit rates, both higher and lower, usually push rents up.”
He has called for a new model for deposit rates based on a realistic understanding of the domestic economy which enables ministries and organizations to function in tandem.
“Most of the people are avoiding risks, which means they prefer to park their money in banks instead of starting a business or investing in other sectors,” Boghazian said.
