Recording the highest monthly rent record in the country – Tejaratnews

Drama sequences from “Rent Record” can be seen in the country. In the month of Mehr this year, the “highest monthly rent growth” was recorded in the past year; Previously, the highest annual rent inflation was recorded for the months ending in September this year. Their research shows that the behavior of the housing rental market has undergone a fundamental change compared to previous years, in the sense that there is no more “autumn sleep” after “summer activity”. What are the two reasons for the autumn record?

The drama series Record Inflation in the rental market was released this time in the form of recording the highest monthly inflation in this market in the first month of the autumn season. In October this year, monthly rent inflation based on changes in the country’s housing rental price index was recorded at 4.3%, which is the highest monthly housing rent inflation since October last year. Recording the highest monthly housing rental inflation record in October this year has turned the autumn rental market into a hot and heated market, contrary to its traditional and usual practice. Surveys show that tenants are already paying “delayed compensation” for spring housing inflation.

Monthly rent record after annual record

The latest statistics published by Iran’s Statistics Center in connection with the changes in housing rent index show that in October this year, the rate of monthly rent growth in the country has reached its highest level compared to all the months since October last year. This new record of inflation in the rental market has been recorded after an annual inflation record was recorded in this market in the previous month (September), and for this reason, consecutive records in the rental market due to the fluctuations of rent price growth can be considered a drama series for tenants. interpreted

In the first half of this year, housing rent inflation recorded the highest annual rent growth record compared to the previous 12 years. This means that in the first six months of this year, the average rent growth in the country was higher than the average annual rent growth in all the past 12 years. Even now, the highest monthly inflation has been recorded in this market (since October last year).

The monthly housing rent inflation in the country reached 4.3% in October, while it was 3.5% in September and 3.3% in August. In each of the months of July and June, this monthly inflation was about 2%.

The point-to-point inflation of housing rent based on the changes in the rent price index has been recorded as 39% in October this year, and it is exactly 0.4 percentage points higher than the point-to-point inflation of rent in September. In September of this year, point-to-point inflation of housing rent was reported as 38.6%.

Three messages from autumn hot rent

The impressive series of consecutive record inflation in the rental market has made the conditions for tenants in this market more difficult than before and on the other hand, it has sounded a warning alarm from this market for the housing policy. At the same time, this sad series of consecutive records of rent growth conveys three important messages from this market.

The first message actually answers the important question, why, contrary to expectations and contrary to the traditional practices of the rental market, the fall housing rental market this year has become so hot and heated in terms of the growth of rental costs? This is because usually, under normal conditions, the heat of the rental market subsides with the arrival of the autumn season and the end of the summer season, when the peak of relocation in this market takes place in this season; But this year, a procedure contrary to the conventional direction of this market has been reflected in the official statistics. Of course, in addition to the official statistics, the observation of the rental market and the results of the field research of “Economy World” also show this issue.

Real estate brokers in Tehran and other cities told “Economist World” that this year we saw a different trend from previous years in the rental market, and contrary to what was expected, with the passing of the moving season, the summer inflammation of rental prices (according to the traditional routine of this market) subsided. and the heat in the autumn rental market will decrease, but in October this year, the rental market was an inflated and heated market in terms of changes in the rental price level.

They stated: Usually, in the past years, we advised the tenants to move the time of their move in the rental market from summer to autumn and winter, so that due to the change of season and passing the peak of relocation, they can get their desired residential unit at a more reasonable price. and rent more flexible terms. But this year, this procedure has been completely reversed.

Surveys also show that before the period of housing price jump, the rental market entered the “autumn sleep” after the end of the “summer movement” and the seasonal changes in these two time periods are always accompanied by a decrease in the temperature in this market in favor of the tenants or at least no change in the relative conditions. It was associated with summer. But this year, for the second year in a row, October became synonymous with hot autumn for renters in terms of changes in rent levels. In October last year, the monthly rent inflation in the country was recorded as 6.1%; This means that the rent level in Mehr grew by 6.1% compared to September 1401.

An important reason for this unusual event and contrary to the usual practice of the rental market years goes back to “the loss of purchasing power of first-time buyers in the housing market”. In fact, the first message of the heated autumn of the rental market is related to the overload of the rental market demand due to the inability of the most consumptive form of housing demand to buy residential apartments. As a result of the jump in housing prices that started in Tehran in 1997 and in other cities in 1998, the purchasing power of consumers, especially first-time buyers, was practically lost in this market. But the process of getting married and forming new families did not stop. For this reason, that group of potential home buyers, who account for more than 70% of new households in Tehran and other big cities, had to turn to the rental market and became uninvited guests of this market. In fact, it can be said that the queue of demand in the housing rental market was formed due to the jump in housing prices and the inability of first-time homeowners to buy an apartment, and this demand in the form of overtraffic in the rental market has led to consecutive records of inflation in this market, so that it can be said that the drama series of consecutive records Inflation in the rental market is practically the result of the overtraffic of renting due to the forced withdrawal of consumer demand, especially first-time homeowners, from the home buying market.

Aftershock of spring housing inflation

The second message of the heated autumn of the rental market, which is reflected in the official statistics related to the report of changes in the consumer price index in October this year by the Iranian Statistics Center, is the delayed spread of the aftershock of spring inflation in the country’s housing market. Although the official statistics related to housing inflation this spring have not yet been published, the official statistics of Tehran city housing inflation in the spring on the one hand and the results of field research on the state of the metropolitan housing market on the other hand show that this fall’s event in the rental market is actually a compensation or The aftershock was the delayed jump in housing prices this spring. In Tehran, the average housing price increased by 21% between the beginning and the end of spring 1402, and in other metropolises, housing market activists reported a significant increase in sales prices this season.

In this way, considering that due to the high sensitivity of the rental market to price changes, the effect of the housing price increase is transmitted to the rental market with a delay, one of the most important reasons for the high autumn temperature in this market can be attributed to the spring housing inflation. . In fact, the spring housing inflation has been delayed to the autumn rent inflation. For this reason, in a situation where we saw a decrease in housing prices since the summer, but tenants are still paying for the spring growth of housing prices.

This summer, on average, the average housing price in Tehran city decreased by 5.5%, and the housing market activists of other cities also reported a summer decrease in the prices offered for the sale of apartments. It is expected that this decrease will be reflected in the form of a decrease in inflationary heat in the rental market in the following months.

Running away with general inflation

The third message from the hot autumn of the rental market is related to the chasing and running away of the inflation of this market with the general inflation. Rental market activists and the results of field research as well as observation of trends in general inflation and rental inflation show that one of the most important determinants of rental inflation is the level of general inflation. increased. In fact, there has always been a kind of chase and escape between general inflation and rent inflation, and it has become more pronounced after the housing price jump period.

In the situation that in the past months, including this spring and summer, one of the reasons for the increase in the monthly rent inflation was the high general inflation, but this October, the high rent inflation increased the level of general inflation as well. The reason is clear. The weight of the rent index in the total consumer price index is significant and more than 33%. Therefore, in the hot month of the rental market, in which the highest monthly rental inflation record was recorded, this record breaking also increased the level of general inflation. In fact, surveys show that the heavy monthly growth of rent in October this year became a factor in increasing the level of general inflation. The monthly general inflation increased from 2% in September to 2.3% in October. This shows that just as the level of general inflation is one of the determining factors in the levels of rent inflation, the positive growth of rent can also significantly affect general inflation and increase it. These conditions can be interpreted as “chase and run” of general inflation and rent inflation.

The result of a heavy increase in rent

The heavy rise or consecutive and serial record-setting inflation in the housing rental market, in addition to making the conditions more difficult for tenants than ever and setting a hot autumn for them in terms of the proposed housing rental price levels, also brings another economic consequence, and that is from The conventional distance between general inflation and housing rent inflation is disappearing.

The recording of the highest monthly rent record in October this year, which has been unprecedented in this market since October last year, has caused the ratio of general inflation to rent inflation, which was about 1.5 times in the first half of the 90s, i.e. the years before the jump in housing prices, to the lowest. reach its limit and practically this ratio becomes equal. In September of this year, the ratio of general inflation to rent inflation reached its lowest level of 1.02%. This ratio decreased again in October and reached the level of 1.005%. This means that rent inflation actually reached general inflation. This does not mean a reduction in the level of general inflation; Rather, it shows the unusual increase in the rate of rent growth in the country and is a measure to measure this issue. That too in a situation where general inflation is at high levels. In fact, this issue shows that the growth rate of rent is unusually high, so that this high rate has destroyed the conventional distance between rent inflation and general inflation, and the ratio of general inflation to rent inflation has reached an equal level, i.e. the number “one”. “, has reached

Source: World Economy