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 arms’-length apartment transactions recorded between January 2010 and December 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, seasonality, and location and month fixed effects. The results show that a positive fuel-price shock lowers average peripheral house prices by about 1.7 percent relative to central districts after a six-month adjustment period, with the effect persisting for at least one year. 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.