Iran has been ranked the world's seventh most unaffordable country relative to household income amid the country's worst economic crisis since the founding of the Islamic Republic.

Most Iranians, battered by years of 40% annual inflation, now spend half or more of their income on rent alone. This means that an ordinary worker earning $200 a month has less than $100 for food and all the other essentials.

This week, Mohammad Saleh Shokoohi Bidehendi, a faculty member at the Iran University of Science and Technology's School of Architecture and Urban Planning, said: "In global rankings, Iran is among countries where housing prices are disproportionately high compared to average incomes."

Speaking at a meeting titled 'Programmatic Solutions for Housing Provision in Iran', organized by the Center for Iran’s Development and Foresight Studies, he added: "This makes it extremely difficult for many families to afford a home."

He noted that housing costs consume 37% of household expenses in urban areas, about 50% in Tehran Province, and over 55% in the city of Tehran. "This situation has placed Iran seventh worldwide in terms of housing affordability relative to household income," he added.

While he did not specify the source of the figures, they match closely with global data. According to Numbeo's mid-2024 reports, Tehran was ranked as the fourth most expensive city globally based on the House Price to Income (HPI) ratio, while Iran stands as the twelfth most expensive country. The HPI compares the median house price to the median household income, highlighting the significant gap between property costs and average earnings.

In July, Iranian media reported that ordinary citizens are now confronting the grim reality of a century-long wait to achieve homeownership as housing prices continue to soar. By June, the average price per square meter in the capital had surged to approximately 860 million rials (around $1,475).

For working-class Iranians earning an average of $200 per month, local estimates suggest that it would take over a century — if not longer — for a wage earner to afford even the smallest residential unit.

Economic sanctions, high inflation rates, and a surge in real estate investment as a hedge against currency devaluation have driven property prices upward. The economic crisis has also forced at least one third of Iranians below the poverty line.

Moreover, data from the Central Bank of Iran indicates that the average price per square meter of residential units in Tehran has skyrocketed in recent years, far outpacing wage growth. The disparity has led to declining home ownership rates, forcing many households to allocate a substantial portion of their income to rent.

Fardin Yazdani, an expert in urban and housing economics and director of the comprehensive housing plan review studies, noted during the meeting that after 2018, the economic landscape in Iran shifted dramatically.

Due to sanctions and a surge in demand for investment in land and housing - driven by the need to safeguard the value of financial assets - Investment shifted away from the production sector. This exacerbated negative economic growth, culminating in stagflation within the housing market. Iran's currency has lost its value almost 15-fold since early 2018.

It's a peculiar paradox in the housing market: while genuine demand shrinks because families can't afford to buy homes, prices continue their upward march, because people consider their real estate as the only guarantee against inflation. Wealthy investors, eager to preserve the value of their assets amid economic uncertainty, are snapping up properties to hedge against inflation.

It has made real estate — much like gold and foreign currencies — a favored capital investment in Iran. Many are attempting to safeguard their assets from rapid currency depreciation by purchasing houses and apartments. As a result, real estate prices continue to climb in tandem with the escalating value of the dollar.

Experts say it is critical for the government to implement effective tax regulations to prevent land from becoming a speculative asset. A comprehensive national land and housing plan is also needed, along with restructuring the national budgeting system.

The ongoing economic crisis has eroded public confidence, reflected recently by historically low voter turnout in elections. Experts warn that economic turmoil is likely to worsen, with no end in sight to Iran's confrontational nuclear and regional policies.