Tehran: Small Homes Trigger Housing Recovery

In the face of rising demand for inexpensive residential units in the capital Tehran, a senior advisor to the minister of roads and urban development predicted that the market for small and cheaper apartments will heat up during the current year (ending March 20, 2018).

“First-time home buyers and applicants for new houses in distressed areas of Tehran are behind the anticipated surge in the sale of cheap apartments in the capital, while the market for expensive and luxury apartments will lag behind,” Hossein Abdoh-Tabrizi was also quoted as saying by Mehr News Agency.

He noted that declining population growth and migration to Tehran eliminate any unusual demand in the market, therefore a surge in the sale of affordable apartments is the only way to stimulate Tehran’s housing sector.

According to the latest National Population and Housing Census for the year to March 21, 2017, Tehran’s population stood at 8,293,000, marking an increase of 5% compared to the previous census in 2012.

This is while the ratio of Tehran’s population growth stood at 6% back then, which shows population growth has declined by 1% in the capital.

Abdoh-Tabrizi added that following every four divorces, a new housing demand takes place, in addition to the 650,000 couples tying the knot each year who also require a roof over their heads.

“It is necessary to increase the allocation of long-term loans to boost the purchasing power of lower-income families who intend to buy homes but cannot afford them,” he said.

Currently, rumor are circulating that with the rial’s recent weakening against the dollar, home prices are in for an increase.

However, Hesam Oqbaei, the head of Tehran Association of Realtors, disagrees and believes that the real-estate market in Tehran has been stuck in recession for years and there is no customer for apartments at the current prices so it would be impossible to further raise the prices.

“We anticipated that the housing sector will begin its booming phase in the second half of the current Iranian year (started March 21), but as long as there is no reform in the country’s monetary and banking policies, we cannot expect a significant growth in home sales,” Oqbaei told Fars News Agency.

He stressed that home prices will not increase faster than the rate of inflation, provided the market fares well.

“We cannot say for sure that home sales will definitely surge in the second half of this year, but one thing I can say for sure is that the prices will not change by the end of summer,” he added.

Oqbaei noted that according to the latest statistics, during the week to July 30, a total number of 5,093 homes have been sold in Tehran while people have also signed 5,672 rental housing deals that are almost the same as it was in the previous year.