Sharp increases in real gasoline prices raise commuting costs and can alter residential location choices by changing accessibility to employment concentrations. In cities with strong central business districts but emerging polycentric patterns, such shocks may relocate housing demand across locations. This study examines that adjustment in Tehran, a highly car-oriented metropolis. We combine official monthly gasoline-price data with 1.4 million arm’s-length apartment transactions recorded between Farvardin 1389 and Esfand 1398 (approximately March 2010 and March 2020), making this one of the largest housing transaction datasets analyzed for Iran to date. Exploiting three discrete fuel-price increases, we estimate a difference-in-differences model comparing housing-price dynamics in central and peripheral districts while controlling for dwelling characteristics, and location and month fixed effects. The preferred six-month-lag specification indicates that housing prices in peripheral areas were approximately 2.1% lower relative to central areas during the defined post-shock periods. Estimates are negative across alternative lag specifications, although their statistical precision is modest. Although small relative to overall housing-market volatility in Iran, this effect reflects a systematic spatial response to changes in commuting costs. The findings are consistent with a modest reallocation of housing demand toward districts with greater employment accessibility. Where housing supply adjusts gradually, such demand shifts may contribute to relative price changes across locations. More broadly, the results highlight the interaction between transportation costs, residential sorting, and housing-market adjustment in a large developing-country metropolis. They suggest that fuel-pricing reforms may generate unintended spatial consequences and should therefore be considered alongside broader transportation and housing policies.
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Bagheri, A. & Vahidmanesh, A. (2026). Commuting Costs and Urban Housing Prices: Insights from Tehran. Iranian Economic Review, 30(3), 1218–1244. https://doi.org/10.22059/ier.2026.399659.1008282
MLA
Bagheri, A., & Vahidmanesh, A. "Commuting Costs and Urban Housing Prices: Insights from Tehran", Iranian Economic Review, 30, 3, 2026, 1218–1244. doi: 10.22059/ier.2026.399659.1008282
HARVARD
Bagheri, A., & Vahidmanesh, A. (2026). 'Commuting Costs and Urban Housing Prices: Insights from Tehran', Iranian Economic Review, 30(3), pp. 1218–1244. doi: 10.22059/ier.2026.399659.1008282
CHICAGO
Bagheri, A. & Vahidmanesh, A., "Commuting Costs and Urban Housing Prices: Insights from Tehran." Iranian Economic Review, 30 3 (2026): 1218–1244, doi: 10.22059/ier.2026.399659.1008282
VANCOUVER
Bagheri A., Vahidmanesh A. Commuting Costs and Urban Housing Prices: Insights from Tehran. IER. 2026;30(3):1218–1244. doi: 10.22059/ier.2026.399659.1008282
