Iran Economy NewsIran’s astronomical housing prices

Iran’s astronomical housing prices


Since the mullahs came to power in Iran, the topic of housing has remained a contentious issue. Home ownership is becoming increasingly difficult with each passing day. Unfortunately, for the younger generation, owning a home has become all but a dream due to the regime’s failed policies.

The Iranian people’s inability to afford residential units built in the country has left housing developers disheartened, according to Ali Farnam, a specialist at the Majlis (parliament) Research Center. “Consumer demand is currently almost non-existent in the market,” he told the semi-official Tasnim News Agency in an April 16 interview.

The average housing price per square meter in Tehran has skyrocketed over the past five years, Farnam explained. In 2018 the average price per square meter was 60 million rials. Today, it exceeds 600 million rials, marking a ten-fold increase.

According to Farnam there has been no increase in housing production between 2018 and 2023. Moreover, the risks of construction materials becoming more expensive and wages increasing have escalated. Additionally, prices increasing in other competing markets, such as Iran’s gold and coins market, are overshadowing the profitability of the house construction industry.

Housing development in Iran has been terminated despite the pledge of regime President Ebrahim Raisi to build one million residential units each year at the outset of his tenure. This commitment was deemed “unrealistic” from day one by both housing market specialists and Majlis members from the beginning.

Only 300,000 units are being constructed across the country each year, which is a third of the volume produced before 2013, Farshid Pourhajat, Secretary of the National Association of Mass Builders, said back in March. The price of construction materials doubled last year (the Persian year begins on March 21), while the construction and sale of housing have come to a halt since December due to the skyrocketing price of the U.S. dollar rate in Iran, Pourhajat explained.

The state-run Donya-e-Eqtesad newspaper published a report on April 8 discussing the significant surge in housing prices and the cost of rent in Tehran over the past three months. The report highlighted that housing prices have risen by a minimum of 40 percent when compared to prices just three months ago.

“The government no longer has adequate social capital and has lost the ability to monitor the chaotic housing market,” the state Jam-e Jam newspaper wrote during the same period.

Mojtaba Yousefi, a member of the Majlis Civil Commission said that on average 51 percent of the country’s population are tenants.

On April 9, referring to the rising housing prices and rents, Yousefi told the semi-official ILNA news agency that the economy, especially the branch related to the minimum expenditure basket, cannot be controlled through directives and orders.

He is referring to the guidelines set to determine the ceiling of rent price growth in the range of 20 to 25 percent, announced by Raisi’s government last year.

Yousefi went on to explain that they were witness to the fact that this ordered price limit was not implemented. When inflation increases, the price of construction materials increase, resulting in the rise in housing costs. It is impossible to control the market through such a method, he added.

According to the data of the Statistics Center, in 2011 housing consists of 34 percent of an average household budget, rising to 39 percent in 2017. This figure reached 47 percent in 2020.

The data related to the Organization for Economic Co-operation and Development (OECD) shows that in the period of six years and nine months from 2015 to the fall of 2022, the price of each square meter of residential units in Saudi Arabia decreased by 12 percent.

At the same time, the price of each square meter of a residential unit in Tehran has experienced a 963-percent growth.

One should take into account that the housing market is affected by the ownership of millions of vacant houses held by various entities associated with the regime, such as the Housing Foundation, the Mehr Housing Foundation, the Mostazafan Foundation, IRGC banks, and state-owned banks. These entities benefit from rising housing costs and rental rates, imposing a further financial burden on the Iranian people.

Despite the fact that a significant number of people are becoming homeless or living in extremely poor conditions, the ruling regime has failed to provide any viable solutions.

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