What did the inflation of construction materials bring to the housing market?/ Builders’ anger with the construction industry

According to Tejarat News, the price of land and construction materials fluctuates with the effect of inflation like other economic goods. As Iraj Rahbar, the head of the Tehran Mass Builders Association, has announced, currently the fluctuation of land prices in Tehran is approximately between 30 and 300 million tomans in different areas.

These two factors, in the position of the main determining factors for determining the cost of construction, have increased the price of residential units in the last year.

According to the statistics of the Central Bank, which is published every month by Tehran Housing Authority, the average price of apartments has increased every month from December last year to November this year, except for Farudin 1401, when the market is in the excitement and stagnation of Nowruz.

As mentioned, the head of the mass builders’ association has stated in a conversation with ILNA that currently the price of housing in the worst areas of Tehran’s suburbs is not less than 30 million tomans, and this price reaches 300 million tomans in district one of Tehran!

According to the leader, license fees, density, municipal fees, etc. are also added to the final price. But what is the status of construction inputs as another factor in determining housing prices?

Percentage increase in the price of construction inputs

The latest statistics of the Iranian Statistics Center show that the price of construction inputs has increased by 29% from the summer of last year to the summer of this year. If this statistic is examined in more detail, we have seen price increase in cement group by 21.4%, electrical installation group by 39.5%, mosaic, tile and ceramic group by 36.8%, building painting group by 8.56%. The glass group has grown more than other groups with an increase of 3.83%.

Meanwhile, according to the statistics of the Central Bank, the average housing price has experienced a 37.6% increase from the summer of 1400 to this summer.

Considering the inflation of construction inputs and housing prices, along with the stagnant transactions of the real estate market, is housing construction still attractive for investors and mass builders? It should be mentioned that Davoud Beginejad, a researcher in the field of housing, had previously stated that currently the profit of builders has reached less than 20%.

How much does it cost to build an apartment on the outskirts of Tehran?

Based on the leader’s recent statements regarding the price of land in the suburbs of Tehran, Tejarat News conducted an interview with him and investigated the cost of construction and the attractiveness of investing in the construction industry due to the inflation of materials.

The head of Tehran Mass Builders Association said about the price of housing construction: “Currently, the construction of an apartment with ordinary materials in the outskirts of Tehran is estimated at 10 to 12 million tomans per square meter.”

He also added about the attractiveness of the profit of building apartments for the builders: “This investment has a capital sleep and considering the inflation stagnation in the real estate market, it is not profitable for the builders.”

The leader emphasized: “On the other hand, people’s purchasing power has also decreased and less shopping is done than before.”

Will housing prices increase again?

According to the increase in inflation and the expectations related to it in the society, it seems that the average house price in Azar month, which is going to be published by the central bank in a few days, is still on the upward trend.

Mansour Ghaibi, an expert on the real estate market, had previously said in an interview with Tejarat News about his prediction of the boom in the real estate market in the next few months: until Eid, we have an effective presence for buying real estate, and since false figures have increased, some Manufacturers who have stockpiled their products will enter the market when they feel the situation is right. In general, the demand and supply for sales are increasing, and this will cause relative prosperity in the near future.

Read more reports on the housing news page.