How much is the cost of rent in 31 provinces?
According to Tejarat News, quoted by the world of economyWeight Rent The cost of urban households increased in the basket.
The information related to the level of annual expenses of households living in 31 provinces of the country in 1400, as well as the average rent in each province, shows that last year, the cost of providing housing, at least for tenants, exceeded the “global conventional ceiling”.
This overweight was caused by two main factors affecting rent inflation – housing price jump and mandatory rent control – which resulted in an increase in the population of renters in urban areas. In the beginning of the 1990s, the share of rent in the household budget was one-fifth of the expenses.
The new report on the share of rent in the budget of urban households indicates the increasing pressure of this expense on citizens’ living expenses.
The pressure measurement of the cost of rent for tenants in relation to the annual expenses of living, the information of which was recently reflected in the report of the Statistics Center on household income and expenditure in 1400, indicates that the weight of the cost of rent on the cost basket of tenant households has increased by one percentage point. Is.
According to the recent report of the Household Income-Expenditure Statistics Center, it shows that the cost of renting a 75 square meter apartment unit in the urban areas of the country in 1400 was an average of 30.2% of the total household expenses, while this share in the year 99 was equivalent to 29%. In this way, the rent has grown in the household expenses basket and in a sense gained weight.
The mentioned statistics can also be considered from another aspect; Because the maximum level of rent in the country should be 30%, and this is despite the fact that in the past year, the share of rental housing costs for urban households has slightly exceeded this conventional limit. In this way, the share of rent in the urban household expenditure basket has exceeded the expected limit and currently, according to official statistics, this share is 0.2 percentage points higher than the acceptable value of 30% in all cities of the country.
Of course, in December of last year, the Iranian Statistics Center published another economic report, based on the data of which it was found that the share of rent in the household expenses basket has reached 42%. However, based on the ruler of the annual reports “Income-expenditure of households by urban and rural” which is published by this center, the average share of rent from the basket of urban household expenses in 2019 was equal to 29%, which increased to 30.2% in 1400. According to the statistics reflected in the recent report of the Statistics Center on Household Income and Expenditure, in the past year, every urban family in the country has spent an average of 28 million Tomans on rental housing expenses, which is 30.2% of the total cost of 92,500,000 Tomans. It is annual for these households.
In Tehran province, the situation is much more complicated, and if it was possible to separate the city of Tehran from the aforementioned statistical information, the situation would definitely be much more unfavorable. Last year, almost 46% of the total expenses of the tenant households in Tehran province were spent on paying the rent, and this figure is probably more than half of the total expenses in the city of Tehran. According to this report, the cost of renting in Tehran province last year was an average of 63 million and 300 thousand tomans, which has a significant share of the 137 million tomans cost of urban households in this province.
The second estimate of the share of rent from expenses
Calculated figures around the ratio Rent This is the ratio of the “floor” and “minimum” values to the total household expenses in the last year; Because the statistics center has not yet published the report on housing rent in the urban areas of the country for the winter of last year. Therefore, the average rental price of the country in the summer of last year was used to calculate the share of rent from household expenses. If the 50% growth of rents in the winter of 1400 compared to the same season of 2009 is taken as a basis, the ratio of household rent expenses compared to the total expenses of 1400 reaches 35%. Of course, the mentioned figures are calculated based on estimates; Therefore, if the accuracy of the estimate is high, it can be claimed that the share of rent expenses in relation to the total expenses of the household in the past year has found a great distance from the conventional ceiling.
The cause of rent pressure on the household budget
Last year, the historical record of rent inflation was broken and this rate reached more than 50%. In the meantime, the role of two effective factors in increasing the rate of rent growth in 1400 and setting a historical record is undeniable. The first factor was the three-year jump in housing prices that occurred between 1997 and 2009, and since the rental market reacts to housing inflation with a time interval, the result of the jump in the third year in 1400 was the acceleration of rent inflation and passing This rate was revealed from 50%.
On the other hand, last year, tenants suffered damage due to another factor, and that was government intervention in the rental market. The beginning of the high-speed inflation of housing rent in Tehran and other cities started in 2018 and this situation peaked in 2019. On the other hand, due to the coincidence of these days with the outbreak of the Corona virus in the country and the unfavorable livelihood situation prevailing in the tenant households, the government at that time passed a resolution with the intention of helping to improve the conditions of the tenant households, according to which the landlords are obliged to extend the one-year contracts that expired in 2019 with The growth ceiling was determined and this resolution was extended in 1400.
However, the intervention of the government to regulate the housing rental market on the one hand led to a decrease in the desire of landlords to continue being in the rental market, and tenants suffered from the lack of files. Also, due to the lack of sufficient executive guarantee, the rent growth was actually much higher than the 20% average growth ceiling allowed by the government, and as a result, the rent inflation was not only not controlled last year, but also set a record.
The pressure measurement of the weight of rent in the household expenses basket indicates that in 2010, the share of this expense was about 21% of the total annual expenses of every urban household. Since the housing price jump in the early 1990s actually started in 1991 and continued in 1992, and considering the time interval of the impact of housing inflation on rent inflation, which is usually at least a few months, 1990 can practically be considered as one year. He described with relative stability compared to the current situation of the housing rental market. Therefore, the one-fifth share of housing rent from the total costs of the urban household portfolio is not a far-fetched goal, and such a situation has been unprecedented in times when relative stability prevailed in the housing market.
Another interesting point that can be taken from the report of the Statistics Center is the increase in the number of tenant households in the entire urban areas of the country during a year of 1,400. In the past year, the number of tenant households has increased by about 60,300 and the share of tenants from all types of housing has increased from 22.9% in 2009 to 23.16% in 1400.
In this way, based on the official household income and expenditure statistics in 1400, the situation that tenants are facing today is far more unfavorable than the situation they had a decade ago. In fact, the years of “rental living” have passed and in the middle of the second half of the 90s, the conditions of the real estate market gradually progressed in such a way that now the tenants are facing the worst situation they have ever experienced. The main problem of tenants these days is the mismatch between their ability to pay rent and the rate of rent inflation. In order to solve this problem, the government is looking for the solution of “mandatory” and of course “automatic” extension of lease contracts with a growth cap of 25% in Tehran and 20% in other countries. He went to urban areas in order to reduce the hardships faced by tenants.
However, in practice, the official report of the Central Bank showed that in the first month of the implementation of the government’s three-time resolution regarding the extension of lease contracts from the beginning of this summer, these contracts were not extended with the mandated growth rate announced by the policy maker; Rather, the rent inflation was extended in the first month of the current season, at least in the capital. The Central Bank’s report on the developments of the capital’s housing market in July indicates that the average growth of residential apartment rents in Tehran in the first month of summer compared to the same month of 2009 reached 47.4% and recorded the highest point inflation since the beginning of 2001. has done.
Although the motivation of the policy maker to determine the ceiling of rent growth and to make it mandatory to renew the contracts except in rare cases that are mentioned in the relevant resolution (such as the sale of the property or the intention of the owner to live in the property for himself or his children) was positive, but the results obtained show He says that this resolution has not benefited the tenants in practice and has even led to a reduction in the rent file.
The withdrawal of a group of tenants from the rental market due to the weak performance of the vacant house tax law has actually made it more difficult for renters to find a suitable and affordable house. The issue of not having a guarantee for the implementation of the automatic renewal decree and the withdrawal of landlords from participating in the rental market has caused a group of Tehrani tenants to migrate to the suburbs of the capital and other metropolises.
However, another group of tenants who have been forced to stay in big cities for any reason have actually become victims of housing poverty; In such a way that they are either forced to move and live in houses that are much smaller or inconsistent with their desired minimums, or that in order to cover the costs of rented housing, they inevitably allocate a significant part of their incomes to this and the parameters of poverty in other aspects of their lives. has appeared According to the results of an official study, “housing poverty” has a destructive effect on the quality of life of households; In this way, the higher the housing cost pressure, the lower the calorie supply of households, as well as health and education costs. In this way, housing poverty leads to poorer households in other dimensions as well, and for this reason, the situation in the year 1400 is the narrator of the poorer tenants in the urban areas of the country.
The situation of tenants in 31 provinces
Share calculation Rent As expected, in the cost basket of households by 31 provinces, Tehran province has set a record in this ratio. While the average ratio of rent in the total expenses of urban households last year was 30.2% in the country, this amount is about 46% in Tehran province. Alborz province is also in the next category and tenants in this province have allocated 32.8% of their annual expenses to paying rent. The ratio of rent to total household expenses in Gilan province was 28% last year, and it ranked third in the ranking of rent pressure on household expenses. After that, Qom and Qazvin provinces with a ratio of 27% and Hormozgan and Razavi Khorasan provinces with a ratio of 26 and 25 are ranked next.
This report shows that in the year 1400, the tenant households in the provinces of Chaharmahal and Bakhtiari, Kohgiluyeh and Boyar Ahmad, Yazd, South Khorasan and Ilam respectively were in a much better situation than the tenants of other provinces, because the share of rent from the household expenses of these provinces It was in the lowest amount (between 11 and 13.5 percent).
The way to curb rent inflation
The path that the housing sector policymaker has taken to curb rent inflation and intends to support tenants by establishing policies such as mandated pricing did not go anywhere last year, nor with the minor changes applied, it is expected to lead to an acceptable result this year. . The advice of the experts is that the government, instead of focusing on the mandatory control of rent inflation, should adopt policies to curb general inflation. Since housing rent inflation is a function of general inflation and housing inflation, and of course its effectiveness is somewhat higher than general inflation, the economic policymaker can more seriously pursue programs that lead to a reduction in the general inflation rate, and in the medium term, its effects on A decrease in the rate of housing price growth, followed by a decrease in rent inflation, will be felt.
One of the two main programs in the field of reducing general inflation, which is still on the agenda, is to reduce the risk of the non-economic variable affecting the markets, i.e. negotiations to lift sanctions. In recent days, the resumption of negotiations and the exchange of political messages about the final draft, which the parties must agree on, has caused the housing market to face a halt in price growth. Of course, the effect of non-economic events and in other words, exogenous variables on the housing rental market will be reflected when a stable situation prevails in the housing market for at least a few months. In this case, stability in the housing market will also lead to stability in the rental market.
But it is obvious that the reduction of non-economic variable risk through the re-agreement to revive the JCPOA will curb inflationary expectations in different markets and its effect will be reflected in the form of a reduction in rent inflation. Moreover, one of the main reasons for landlords’ insistence on an increase of around 50% or even more in the rental rate is that they provide their living expenses from the income obtained from it, and therefore they cannot be indifferent to the general inflation rate.
Another program to reduce the general inflation rate is the use of the “interest rate” tool by the central bank. Increasing the interest rate is a weapon that central banks resort to in order to prevent general inflation at the country level, and in recent months, the United States and many European countries have resorted to it. In the weeks when the US Federal Reserve and the European Central Bank tried to curb general inflation by increasing the interbank interest rate, statistics on housing inflation in the United States were published, which show the immediate effect of this policy on general inflation and even housing sector inflation. has it. However, in Iran, the institutions in charge of monetary policy have not yet made a new decision in this field, and it is expected that the focus of macroeconomic policy makers, instead of mandatory intervention, will be the use of such effective policies to curb inflation in all sectors.