Since January, Iran's housing sector has been in a long-awaited boom phase after a five-year recession — the longest dip in recent memory. But now the sector is in danger of sliding back into negative ground due to the sudden and massive price hikes across the country spurred by the ongoing currency crisis.

The Iranian economy — including the rial — has taken a beating since US President Donald Trump unilaterally withdrew from the Joint Comprehensive Plan of Action in May. As the currency plunged, volatility also spread to other markets, including property, which has seen continuous price jumps in recent months.

Home prices in Tehran and across the country first started rising in August 2017, on the back of a decision made by the Central Bank of Iran to cap interest rates on bank deposits at 15%, driving some capital toward property. The decision helped an expected housing boom, which, by then, was showing itself in the form of a gradual increase in the number of property deals and a rise in the number of construction permits. The boom stemmed partly from government support in the form of cheap loans that boosted purchasing power against the backdrop of a then-calm currency market. It was also partly due to private sector builders that invested more in the sector after lobbying to eliminate regulations that made the issuance of construction permits difficult. But house prices started growing much more notably at the beginning of the current Iranian year in March, due to inflationary effects caused by currency unrest, with the capital — which usually accounts for roughly half of property deals in the country — seeing the biggest hike.

Yet, according to the latest central bank data, Tehran's housing market only saw deals involving 12,006 residential units during the fifth month of the current Iranian year that ended Aug. 22, signaling a year-on-year decline of 33.2%. This is while the average price of each square meter of a home in the city showed a whopping 62.1% annual surge. The trend of falling home deals, coupled with surging prices, has gone on in Tehran for three months now as the city saw the number of residential property deals dwindle by 7% and 3.1% during the fourth and third Iranian months respectively, while prices went up by 54.2% and 45%. Looking at the broader trend during the first five months of the current Iranian year as a whole, the number of residential unit deals has declined by 7.3% while prices have increased by 45.5%.