Indicators testify to a critical, unprecedented situation in the housing sector.
The number of years people have to wait to save enough money to buy a residential unit has hit three digits. Nearly half of the population in Tehran is living in rented homes and the share of housing in the budget of Iranian urban households is three times the world average. And as much as 40% of the country’s population is suffering from poor housing. It goes without saying that these critical conditions did not emerge overnight.
Over the past few decades and under different governments, housing indicators have moved in a negative direction and the dimensions of the problem have gradually expanded to become a full-fledged crisis.
Nasser Zakeri, an economist, prefaced his write-up for the Persian daily Shargh with this note. A translation of the text follows:
Housing Takes Backseat in Policymaking
Of course, previous governments had introduced measures to improve the housing conditions, but to no or little avail. If we ask each government official in charge of the housing sector during the past three decades, they will definitely give a long list of policies and measures undertaken by their administrations. They may even talk of the positive turnaround in some housing indicators witnessed during their tenure.
But the question remains: Why did such a crisis emerge? Why did the series of apparently positive and successful measures fail to prevent the crisis?
By reviewing the performance of Iranian governments that took office after the Islamic Revolution, we can say that either housing was not one of their top priorities, or when they decided to pay more attention to this issue, they were not willing to consult with experts and only relied on their own assumptions and delusions to devise half-baked plans.
Meager Share of Housing in Bank Facilities
In the past three decades, Iranian governments have increased home loan ceiling multiple times in response to price increases. However, no reliable report has been released on the efficiency of this policy.
The implementation of this policy has never increased the share of mortgage loans from the total balance of banking facilities. In fact, government officials have never wanted, or been able to put the country’s banking network at the service of citizens in need of housing.
As we speak, the share of housing sector in bank facilities of our country has barely reached 7% while in the United States, home loans account for 20-25% of total loans.
Government officials have not even allocated this small share of loans to those who really needed home loans. As a result, a significant part of home loans has been put at the disposal of those who buy numerous residential units and rent them out.
In other words, instead of helping the needy, this facility has compounded the situation by adding to the resources related to speculative demand. The interesting point here is that no documented report has been prepared on this issue and government officials have not clarified whether, for example, the increase from 6% to 7% in the share of housing in the balance of bank facilities has really benefited the real housing applicants, or only helped the housing market register a temporary break from recession in favor of speculative investors.
Housing Rent Index Skyrockets
Over the past four years and with the intervention of the government in the rental housing market, we have seen the introduction of yet another ineffective strategy.
Government directives have been practically ignored by landlords and the housing rent index has increased from 132.3 in March 2019 to 500 this year. This is while if the implementation of directives had been guaranteed, the index would have stood at 270. Neither the previous government nor the current one has asked for a report on the impact of directives and the reasons for their ineffectiveness.
In closing, all officials in charge of the housing sector over the past three decades stand accused of negligence; they either gave the wrong medicine to the patient or used the right medicine in the wrong dosage, and never bothered to report on the consequences of their diagnosis and treatment.
