Economy, Business And Markets

Q1 Home Sales Up 5.9%

Q1 Home Sales Up 5.9%Q1 Home Sales Up 5.9%

Some 36,900 homes were sold in Tehran during the three month ending June 20, showing a growth of 5.6% compared with the same period last year.

This latest uptick comes on the heels of other positive trends that have recently stirred hope for a housing recovery after a long and painful recession. A CBI report in May showed a 20.4% rise in home sales during the month that ended April 19.

Central Bank of Iran’s latest “Trends in Tehran Housing Market” indicates that the average price of a residential unit stood at 41.6 million rials ($1,200) per m2 during the three-month period, a growth of 2.7% year-on-year.

The report also shows that house prices recorded an annual growth of 3.5% during the month ending June 20, with one square meter of apartment selling for 42.2 million rials on average. The total number of home deals also reached 15,562 during the final month of spring, declining by 0.6% compared to the previous month.

Homes built after 2011 are still preferred by the majority of buyers:  newly-built houses accounted for 51.8% of the total deals.

Buyers also showed more interest in buying 70-80 square meter apartments at an average price of 25-30 million rials per m2.

District one, that includes Tehran’s northern upscale neighborhoods, accounted for the most expensive houses at an average price of 88.6 million rials ($2,560) per m2. However, District 5, located in the northwest of the capital, recorded the highest number of sales, accounting for 15% of the total deals during the one month period.

CBI data also indicates that during the period rents grew by 9.7% in Tehran and 10.5% in other urban areas. The rise in rents is assumed to have been fueled, in part, by recent cuts in interest rates.  

  No Increase in Rents  

Meanwhile, Hesam Oqbaei, the head of Tehran’s Association of Realtors considers the rental market to be stable, dismissing reports that rents had risen in response to the three percentage point deposit rate cut announced by banks last week.  

Saying that contrary to the CBI report home prices have not experienced a  hike in recent months compared to the previous year , Oqbaei said: “Rents should also not increase”, reported Fars News Agency.

Although he mentioned that in some parts of big cities including Tehran – where demand surpasses supply – we have been witnessing a rise in rents, “but that hike is limited to 10%.”

Stressing that it has been a calm year in the rental market and rumors should not be allowed to disrupt that, he said: “Rumors can be a real threat to the rental market, because they can unleash a negative mood. We hope such rumors can be prevented.”

According to the realtor, one such rumor is that because interest rates have come down, landlords have moved to increase the rents. “I emphasize that deposit rates will not affect the rents this year because the landlords have always been interested in rents [in contrast with security deposits] and this is nothing new.”

All in all, Oqbaei says, “the decrease in interest rates is good for our economy and we believe it can incentivize builders to resume construction.”

Reminding that changes in the rental market usually take place during the summer and rents will be set based on common forces of the market, the head of Tehran’s Association of Realtors continued. “The main criteria for setting rents around the world and in our country is home prices. So when there has been no change in prices, there is not much to say about increase in rents.”