Iran's real estate market, mired in a slump for years, has recently staged a sharp rebound. As inflation soars uncontrollably following the military clash with the United States, funds fearing a decline in asset values are flooding into the property market.
According to Britain's Financial Times (FT) on Wednesday, the Tehran Association of Realtors estimated that housing prices in the capital, Tehran, have risen about 80% since the war broke out in late February. This exceeds the official inflation rate over the same period.
Until the war, Iran's real estate market had remained in a prolonged slump. Based on the last official statistics, the national housing price increase stood at just 35% year-on-year, failing to keep pace with high inflation. Recently, however, the situation has changed completely. Buying demand is spreading not only across the metropolitan area but also to Tehran's outskirts and Caspian Sea resort cities, which are perceived as relatively safe areas.
A local brokerage industry official said, "An apartment that cost 300 billion rials (about 336 million won) before the war traded this week at 580 billion rials (about 650 million won)." The official added, "Sellers are holding back their properties expecting prices to rise further, while buyers are trying to convert into real estate before their cash loses value."
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Behind the surge in real estate prices lies a severe decline in currency value. Iran's rial has fallen about 53% against the dollar over the past year based on the unofficial exchange rate. As the purchasing power of holding cash continues to shrink, analysts say the preference for real assets is strengthening.
Living costs are also greatly increasing the burden on ordinary citizens. The price of cooking oil rose 354% from a year earlier, while eggs climbed 343%, chicken 287%, and imported rice 223%. The consumer price inflation rate announced by the government also exceeded 80%, marking the highest level in decades.
Gold, which was a representative safe-haven asset during past inflationary periods, has also seen its investment appeal weaken amid recent price corrections. Combined with distrust of the financial system and concerns over the soundness of the banking sector, real estate is effectively serving as an alternative investment destination, observers say.
However, experts point out that the current rise in housing prices should not be interpreted as a sign of economic recovery. Actual transaction volumes remain limited, and a significant portion of deals are being conducted mainly in cash.
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The biggest victims of the surge in real estate prices are ordinary households. The burden of buying a home is growing especially heavier for the middle class and low-income groups.
A woman in her 50s living in a middle-class area of Tehran said in an interview with local media, "Buying a home is now a fantasy rather than reality." She added, "We have to consider ourselves fortunate just to be able to buy groceries."
Economic experts believe the aftershocks of the war are likely to intensify over the coming months. Saeed Leylaz, a political and economic analyst, said, "The government has long blamed economic hardship on international sanctions, and recently it has been using the war as a new pretext." He added, "The economic shock from the war is not yet over and may become even more pronounced going forward."
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