EghtesadOnline: Iran’s floor area per person has increased to 27 square meters to equal that of Germany and France, up from 25 square meters in the fiscal 2006-7.
The figures are lower than in Egypt, Morocco, Azerbaijan and South Korea, according to the Institute for Management and Planning Studies' latest findings, Hibna reported.
As per the United Nations' definition, floor area per person is defined as the median floor area (in square meters) of a housing unit divided by the average household size. This indicator measures the adequacy of living space in dwellings. A low value for the indicator is a sign of overcrowding.
Referring to the significant role of household savings in capital accumulation and economic growth, IMPS says the overall economic situation of a country also affects household saving behavior, Financial Tribune reported.
Misguided economic policies in Iran have reduced overall income and led to the inefficiency of financial market. The whole thing has prompted investors to switch from production of tradable goods and services to non-tradable commodities such as housing.
The tradable sector of a country’s economy is made up of industries whose output in terms of goods and services are traded or could be traded internationally, given a plausible variation in relative prices.
Most commonly, the tradable sector consists largely of manufacturing sectors, while the non-tradable sector consists of locally-rendered services, including health, education, retail and construction.
Vacant Homes Increase
To make financial savings, Iranian households invest in residential properties they might leave vacant for months, if not years instead of making cash saving.
The number of empty homes across Iran has risen from 457,000 to more than 2 million over the past decade.
Vacant floor areas have also increased from 57 million square meters to 263 million square meters during the same period.
Current estimates suggest that long-term vacant homes are worth 7,470 trillion rials ($51.5 billion) from 200 trillion rials ($1.37 billion) of a decade ago.
Home Prices on the Rise
Housing market analysts believe the stubbornly large number of empty homes is compounding the housing market’s deeply entrenched problems with lack of supply remaining a key driver of high prices and low affordability.
Latest data released by the Central Bank of Iran show a total of 3,423 homes were sold in Tehran in the first month of the current Iranian year (March 21-April 20) to register a 73.3% decline compared to the month before and 32.2% compared to the similar month of the year before.
The rise in home prices in the capital city continued their growing trend of last year up to the period under review.
The average price of each square meter of a residential unit in Tehran stood at about 112.69 million rials ($777), showing a year-on-year surge of about 104% while average prices were registered at 55.28 million rials ($381) in the similar month of last year.
Home prices in the capital grew by 2.1% compared with 110.41 million rials ($761) in the 12th month of last year.
Newly-built residential units up to five years old grabbed the highest share of the 3,423 deals with 40%--down by 2.5% compared with the same month of last year.
The lost share was added to homes that were six to 10 years old and 16-20 years that registered a 17.9% and 17.4% share of total deals. The share of deals involving homes above 20 years has also increased from 10.5% of the total deals last year to 11.7% this year; they had the smallest share of total deals in the first month of the current Iranian year. Homes with a lifespan of 11-15 years had a 13% share of total deals.
Residential units with an average price range of 60 million rials ($413) to 75 million rials ($517) per square meter were the most popular in Tehran, as they registered a 12.7% share of all deals.
They were followed by units priced at 75-90 million rials ($620) per square meter and 45-60 million rials ($309-412) per square meter with a share of 11.7% and 10.1%, respectively.
From the total number of deals, 57% belonged to homes cheaper than the average per-square meter price of the city (112.69 million rials or $774).
Meanwhile, residential units with a floor area of 60-70 square meters registered the highest number of deals and held a 15.2% share of total deals each.
Units with an area of 50-60 square meters and 70-80 square meters came second and third with a share of 15% and 11.9% respectively. All-in-all, units with an area of less than 80 square meters had a 55.3% share of total deals.
CBI data further show that in Tehran, homes worth between 3 billion rials ($20,618) and 4.5 billion rials ($30,927) were the most popular with a 17.5% share of total deals.
Homes with price tags of between 4.5 billion rials ($30,927) and 6 billion rials ($41,237) and between 6 billion rials and 7.5 billion rials ($51,546) came next with a respective share of 11.3% and 10.6% of total deals.
Collectively, homes valued at less than 7.5 billion rials ($51,546) had a 51.1% share of total home deals in Tehran during the first month of the current year.
Housing Accounts for 33% of Household Expenses
Housing almost always comprises the second biggest expense for households in developing countries (after food) and the biggest expense in developed countries.
According to the Institute for Management and Planning Studies, housing expenses have jumped from 59 million rials ($406) in 2006-7 to 210 million rials ($1,443).
Housing accounted for 28% of Iranians’ total household expenditure in 2006-7, but has risen to over 33% in recent years.