The Money and Credit Council (MCC), the decision-making body of financial markets, approved a new measure as per which the maximum value of loans for purchasing and constructing housing units is doubled.
Mohammad Reza Farzin, the governor of the Central Bank of Iran, made the announcement Tuesday. “The ceiling for housing loans is Tehran City was 2 billion rials ($4,000) for individuals and 4 billion rials ($8,100) for couples. This has been doubled meaning that couples can take out up to 8 billion rials ($16,300) to buy a home in Tehran,” CBI website quoted him as saying.
The cap for loans in large cities (with more than 200,000 residents) has been raised to 3.2 billion rials ($6,500) for individuals and 6.4 billion rials ($13,000) for couples. Residents of smaller urban areas can now borrow up to 4.8 billion rials.
The MCC also increased the cap for repairing housing units from 800 million rials to 1.6 billion rials. The council has allowed banks to utilize housing securities for giving loans to homebuyers. So far, Bank Maskan, the sole state-owned housing lender, had a monopoly on housing facilities through securities.
This decision by the MCC aims to alleviate the financial burden on homebuyers in the face of high and rising housing prices. By doubling the loan, the council intends to provide more accessible financing options for those wanting to buy a home. This move is expected to stimulate the construction industry and help lift the struggling economy.
The move to allow all banks to utilize housing securities for providing loans marks a high point. Previously, the Housing Bank and some other banks had a grip on housing loans using securities. However, with the new directive, individuals can now approach any bank to avail themselves of a loan, regardless of their past banking history.
Data and a variety of indices speak of an unprecedented deterioration in the key housing sector.
The number of years ordinary folks must wait to save enough money to buy a small residential unit has increased drastically. Nearly half the population in Tehran lives in rented homes and the share of housing in the budget of urban households is three times the world average. An estimated 40% of the population suffers from poor and dilapidated housing. It must be recalled that the disturbing conditions have been years in the making.
Over the past decades and under different governments, housing indicators have moved deep into negative territory and the scale and scope of the problems have turned into a full-fledged crisis with no solution in sight.
The rise in home prices, the systemic decline in purchasing power plus the involuntary exit from the market has made bad situation worse.
At the current exorbitant prices and lack of decent income and zero savings the ability to own a small dwelling place simply does not exist save for those who can depend on their parents for help or inherit a fortune!
A part of the unending housing demand can and must be addressed by government-sponsored projects and cooperation between the state/government and private sector. Investment conditions should guarantee in clear terms that if there are delays in the provision of construction funding, projects do not face inflation and increase prices.
