A Long-Term Analysis of Housing Markets and Inflation in Iran

This paper examines the relationship between inflation and residential property rent over a 60-quraters period. Using the conventional OLS models and cointegration and causality models, we examine housing markets rent in Iran. The OLS tests provide strong evidence of a consistent and stable relationship. The cointegration results, and in particular those obtained using the Engle–Granger procedure, provide strong evidence to support the hypothesis that housing rent and inflation are cointegrated. Additionally, the causality results provide strong evidence to support the hypothesis that housing rent is strongly affected by inflation expectations.