Financial Tribune- The number of home sales in Tehran during the 12 months to March 20 surpassed 181,200, marking a year-on-year increase of 11.8%, data released by the Central Bank of Iran show.
The report also reveals that during the month to March 20, a total of 12,307 real-estate residential deals were registered, showing a meager rise of 0.5% YOY.
During the final month of the last Iranian year (ended March 20), residential units built five years or under constituted the highest share of the total sales at 46.5%. Housing units six to 10 years older came next with a 15.3% share.
Keeping up with previous months’ trend, Tehran’s District 5 registered the highest share of home sales among the capital’s 22 districts at 13.3%. Districts 2 and 4 were next, with each grabbing a 9.9% share of all deals. All-in-all, 73.9% of the residential real estate deals in Tehran took place in 10 districts.
The annual statistics are significant for a sector that has been mired in recession for a couple of years and its recovery means much for many industries directly or indirectly dependent on it.
According to CBI, the average price of each square meter of residential unit in Tehran was 49 million rials ($1,010) during the previous Iranian year.
The figure is indicative of an 11.5% annual increase while the average inflation rate for the previous year was announced at 9.6% by the body.
During the one-month period, the average price of each square meter of a housing unit stood at 57.6 million rials ($1,190), up by 4.6% and 26.1% compared with the previous month and the same month of the previous year respectively. The inflation rate for that month was 8.3%.
District 5 registered the highest average price growth during the 12th month at 40.9% compared with the year before while the lowest price hike was registered in District 18 at 11.1%.
Mehdi Soltan-Mohammadi, a housing market analyst, is of the belief that price increases will continue during the current fiscal year.
He said the previous fiscal year saw the first signs of a boom in the housing sector after five years and noted that the decline in interest rates to 15%, which occurred at the end of summer, accelerated the recovery.
This recovery, he said, translated into higher home prices that went well beyond the inflation rate in some districts of Tehran.
“As periods of boom usually last for two to three years, the expectation is that this trend will continue,” he told the Persian news website Fararu.
“Special economic conditions that the country is currently facing and decisions made by the monetary policymaker can prove very effective in this regard.”
The pundit opined that if CBI does not choose to increase interest rates again as it did recently to counter fluctuations in the currency market, the housing market will continue on its current rising trajectory and even go further compared with the previous year.
“If this happens, the increase in home prices will also surpass the inflation rate and this trend will continue in the foreseeable future,” he said.
Soltan-Mohammadi predicted that with the continued uptick in the volume of home sales and the incremental sale of residential units, the supply side of Iran’s housing market will improve and the number of permits issued to construct residential units will rise compared to the previous year.