2500% increase in housing prices in 12 years! / The astronomical distance between property inflation in Iran and the countries of the world
According to Tejarat News, Iran’s housing inflation has gone through an unprecedented trend at the global level in the last 12 years, but the blind spot of this productive market should be searched before this period.
The knot that seemed to be opened in the late 80s with the delivery of Mehr housing units, but continued until the dream of delivering four million units of the National Housing Movement Plan and has now reached a catastrophic state in various dimensions.
The high cost of housing in the last year, along with the growth of the dollar price and the inflation rate, has caused this market to fall into a more critical situation, and now buying a minimal shelter, especially in a metropolis like Tehran, has become a distant dream.
Housing inflation in 12 years
The reports of the Iranian Statistics Center show that the average housing price in Tehran in the fall of 2009 was one million and 183 thousand tomans; This average price has grown to 48 million and 288 thousand tomans, 12 years later, i.e. in the fall of 1401, in an unprecedented event.
In other words, it can be said that the average housing price in Tehran has increased by 26 times between the fall of 2019 and the same season in 2011 and has increased by 2,500%.
In other words, in 1389, a person could buy a medium-level apartment with about 111 million Tomans, but now he has to spend about three billion and 600 million Tomans for the same residential unit.
Every 5 years, a thousand percent growth in housing prices!
On the other hand, Central Bank statistics indicate that the average price per square meter of a residential unit in Tehran has increased by 5.9 times in the five-year period, i.e. from the fall of 2016 to the fall of 2014, and has gone through an increase of 838%. If this statistic is based on the beginning of 2016, it will reach nearly 1000%.
In this way, housing prices have grown by 800 to 1000 percent every five years between 1390 and 1401!
Global housing inflation in 12 years
Recently, a report has been published on the Visual Capitalist website, which shows housing inflation between 2010 and 2022 in 57 countries.
According to this report, with a 103% increase in prices, Iceland has stagnated housing inflation among the rest of the countries over a 12-year period. After that, Lithuania and New Zealand are with 97% price increase. Canada is among the top 10 countries in housing inflation, and its residents have seen a 90% increase in prices during this period.
This is despite the fact that a country like Indonesia has not experienced any price reduction or increase in these 12 years. Some other countries, such as Greece, have recorded up to 26% negative inflation in housing.
This comparison clearly explains the astronomical difference in housing inflation between Iran and the countries of the world; But what are the reasons for this growth?
Reasons for global housing price growth
Regarding the reasons for the growth of housing prices in the countries of the world, we can enumerate some cases; For example, from the point of view of macroeconomics, we can mention the increase of disposable incomes and the decrease of long-term interest rates. Also, from a demographic perspective, there have been factors such as population growth, increased immigration, and changes in family structure. From the point of view of credit terms, wider access and more efficient financing of mortgage loans are important.
We can also consider other factors such as the improvement of macro policy framework, international investment and regulatory and tax changes.
Other interesting cases can be seen among the factors mentioned for the growth of housing prices in the countries of the world. For example, in Iceland, the growth of tourism and the increase in short-term rentals have fueled the housing crisis, and in the United States, the limited supply of housing has been involved in the increase in prices.
The reasons for the increase in housing prices in Iran
Iran’s housing market suffers from all these issues and has been facing problems from both the supply and demand sides for a long time; High prices have reduced people’s purchasing power to a great extent, and now not only is this market facing a lack of consumer demand, but the decrease in the profits of mass builders and the increase in the price of construction inputs have also presented this market with a serious challenge.
At the same time, with the decrease in the value of the national currency, this market has become an arena for earning profit and maintaining the value of assets against inflation. In recent months, capital demand has grown to a great extent in the housing market, which can be another reason for the increase in inflation in this sector.
From a general point of view, the housing price in Iran can be seen as a function of the critical macroeconomic situation in the past years, which has been strengthened by international sanctions, the growth of the inflation rate, and finally the increase in the price of the dollar.
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