One Year’s Salary of a Worker Equals One Square Meter of Residential Unit in Tehran

The average price of housing in Tehran has increased by 92 percent from September of last year to this year. In some areas of Tehran, this price increase has been higher than 100 percent.

Based on statistics from the Central Bank of Iran, in September the average price per square meter of housing in Tehran was 24 million and 200 thousand tomans. This price was 12 million and 700 thousand tomans in September 2019. This means the price of housing from September 2019 to 2020 increased by approximately 92 percent.

Trade News, in a report it prepared about Tehran’s housing prices, based on the approved minimum wage of workers which is 2 million and 600 thousand tomans, calculated that a worker, if spending nothing for one full year and saving all of their salary, after one year would be able to buy 1.20 square meters of housing in Tehran.

Therefore, with the same pattern, that is saving all of their salary, after 46 years this worker would be able to buy a 60 square meter house in Tehran, if the house price remained constant until that time.

This is while the ceiling of housing loans announced by the Central Bank is 400 million tomans, with which one can only buy 16 square meters of a residential unit in Tehran.

The “Nod Eghtesadi” website also compared housing prices in different areas of Tehran in September 2019 and 2020 in a table.

Based on this table, the most expensive areas of Tehran in terms of housing are respectively districts 1, 3, and 2. However, the most inflation in the past year has occurred in district 19; the price of housing in this area of Tehran from September 2019 to September 2020 increased by 129 percent. After that, respectively districts 3 and 1 each experienced growth of 104 and 103 percent in housing prices.

Reasons: From the collapse of the rial’s value to real estate transaction commissions

Previously, the Ministry of Roads and Urbanization had prepared statistics about housing prices in Tehran, based on which housing in Tehran has experienced 500 percent price growth in the past three years.

Experts attribute this sudden growth, which began in mid-2017, to various factors such as a huge discrepancy between the volume of production and actual demand for housing, a dramatic collapse in the value of the rial, and a severe increase in the price of building materials.

According to many experts, another reason for the rise in housing prices, particularly in Tehran, has been the shortage of supply of new apartments.

The Jahan-e Eghtesad newspaper wrote in a detailed investigative report on this: ““Attention to the construction record in Tehran during the period 2014-2019 shows that during this period, annual construction volume decreased by an average of 15 percent.”

Meanwhile, the chairman of the Association of Developers attributed one of the causes of housing price increases to rising government costs for housing construction. Mojtaba Bigdeli told the “Bazaar” website that previously the social security insurance cost per square meter of housing was 250 tomans, but now it is 30 thousand tomans per meter.

According to him, the engineering organizations and city councils also “competed” and greatly increased costs.

The chairman of the Association of Developers considered the claim that “guilds are responsible for housing price increases” as “giving the wrong address on the part of the government.”

Recently, with a government decree, the rate of real estate transaction commissions decreased by approximately 50 percent. This measure was taken in line with regulating the housing market.

However, the head of the Isfahan Real Estate Consultants Union told ISNA: “Regarding the causes of housing price increases, one can list dozens of reasons, and the commission of real estate consultants is only a small part of it. Despite the emphasis of the private sector, the government did not consult in determining the new tariff for real estate consultants, and we predict this hasty decision will make the market even more chaotic than before.”

Shortage of new apartments, the devaluation of the rial, high real estate transaction commissions, or any other reason; the result, however, is one: owning a roof over one’s head for many residents of Tehran and major cities in Iran has become an unattainable dream.

Source: DW