Impact of the Economic Uncertainty Index on the Acceleration of Housing Price Growth and Changes in Housing Transaction Volume in Iran

This paper examines the complex and multifaceted impact of economic uncertainty on the acceleration of housing price growth and changes in transaction volumes, to analyze market milestones and instabilities. First, an economic uncertainty index is constructed by averaging the standardized volatility of seven macroeconomic variables. Using this index, a random-effects panel data model is estimated for 30 provinces over the period from 2008 to 2023. Subsequently, for structural analysis, a stochastic dynamic general equilibrium (DSGE) model based on the optimization behavior of households and banks is calibrated using Bayesian methods. The results indicate that economic uncertainty has a positive and significant effect on the acceleration of housing price growth, but an insignificant effect on the acceleration of changes in housing transaction volume. Structural analysis via the DSGE model provides a deep interpretation of these dual findings, revealing a “stagflationary divergence.” Price acceleration exhibits resilience due to the dominance of speculative demand (housing as a safe asset) over the initial precautionary behavior of consumer buyers. In contrast, transaction acceleration experiences a pronounced boom–bust cycle: an initial speculative surge is quickly followed by a sharp decline caused by affordability crises and credit contraction, explaining the negligible average effect. This divergence suggests that in the Iranian economy, housing prices have become decoupled from fundamental market factors, necessitating dual-policy measures that aim to manage investment-driven demand and support consumer-driven demand simultaneously.