Economy, Business And Markets

Real Estate Prices Register Uneven Growth

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Real Estate Prices  Register Uneven Growth
Real Estate Prices  Register Uneven Growth

The housing market has been grappling with a stubborn recession for at least three years and although housing officials and some market analysts hope for some recovery in the coming months, few if any would bet on a boom of yesteryears.

The Central Bank of Iran has been publishing monthly reports of Tehran's real estate performance as a barometer of the housing sector as a whole.  The Financial Tribune for the first time has conducted a survey of the housing market in major Iranian cities during the fiscal year that ended in March. We have used data provided by the Office for Housing Economy and Planning, affiliated to the Ministry of Roads and Urban Development.   

The survey shows that even though home prices in major cities mostly remained stagnant during the previous FY, some smaller cities recorded a significant increase in prices.

The national average price of residential buildings stood at 28.8 million rials ($947) per square meter, having grown 1.5% compared to the year before.

The numbers, unsurprisingly, show that the most expensive properties were in Tehran at an average price of 41.1 million rials ($1,350) per m2. There is a wide gap between house prices in Tehran and big cities:  Isfahan, as the second most expensive city recorded average prices at 24.9 million rials ($820) per m2.

Among the five other major cities, Tabriz in East Azarbaijan Province had the lowest prices – an average of 18.8 million rials per m2. However, the city recorded a year-on-year growth of 3.8% in real estate prices, higher than Tehran (at -0.6%), Mashhad (-1.7%), Isfahan (-0.3%) and Shiraz (0.8%).

Mohsen Mohammadi, a realtor in Tabriz, said even if there has been such a price hike in Tabriz, no such improvement in demand was seen in the market.

“The market has been in recession for a long time, with no real demand moving the market,” he said in a phone interview.

However he expects better conditions in the second half of the year in early fall and when the country consolidates its ties with international partners. “First the economy itself should improve, as the housing sector depends largely on macroeconomic indices.”

Other Towns

Meanwhile, the housing market in some smaller urban areas experienced notable increases in prices. Khorramabad in Lorestan Province, and Yasouj, in Kohgilouyeh-Boyerahmad Province made the biggest gains, recording whopping growths of 17% and 17.7%, respectively. Homes in Yasouj were sold on average at 11.8 million rials per m2 with buyers in Khorramabad paying an average of 12.7 million rials

Home prices also rose in capital cities in the northern provinces:  during the previous fiscal year, Sari in Mazandaran Province, Rasht in Gilan Province and Gorgan in Golestan Province registered roughly 8% growth. Among the three cities, prices in Rasht were the highest at an average price of 18.7 million rials ($613) per m2.

Birjand, in South Khorasan Province, saw the highest drop in home prices last year at 8.7% year-on-year. Hamedan ranked second with an annual decline of 4.5%.