Lack of a comprehensive database on the status of people’s residential ownership has deprived the government of the ability to streamline the housing sector, says economist Nasser Zakeri in a recent article for the Persian daily Shargh. A translation of the text follows:
Today, housing is of vital importance in all societies; for many reasons, our country is badly affected by challenges regarding the housing economy. On the one hand, the Iranian Constitution, as a national covenant, has tasked the government with providing housing for all citizens. On the other hand, economic hardships of recent decades have turned real-estate into one of the few valuable items on the list of citizens’ assets.
In addition, rent-seeking practices have deepened wealth inequality to an incredible level, such that the number of tenants is increasing rapidly, which has compelled the government to resort to the regulation of rental market in the past few years.
This shows how important it is for the government to have accurate real-estate data to manage the market and prevent the emergence of problems for the national economy and citizens. Evidently, information needed to manage the housing market efficiently is not sufficient, or at least the government agencies and institutions involved in real-estate have yet to believe that they should compile their information and help each other meet their needs.
Not long ago, the head of the Iranian National Tax Administration said as many as 520,000 empty residential properties had been identified in the past year while the owners of 100,000 of these homes claimed that their properties were not empty.
Official Efforts Underlined
INTA needs to carry out a series of measures to calculate and receive the government’s share from the owners of empty residential units, such as engaging in correspondence related agencies and conduct a survey of these homes, not to mention that nearly 20% of the units identified by the officers of this organization have been controversial.
Minister of Economic Affairs and Finance [Ehsan Khandouzi] recently said, “Today we know from which bakery and how much each citizen buys bread.” The question is now that the government is capable of monitoring the economic behavior of citizens in minor issues such as buying and consuming bread, why doesn’t it gather such information in much more important areas such as the ownership of residential units and the living conditions of citizens?
Compiling information on residential units is by far easier than collecting data on people’s bread consumption. However, years-long negligence of this matter has resulted in the lack of sufficient information on vacant homes. Even now, INTA has sprung into action due to the government’s need for funds via tax revenues and not because of the need to streamline the housing sector.
Lack of coherent and useful information on the ownership status of residential properties has deprived government officials of the ability to streamline the housing sector because they have not been able to design effective policies by understanding the market realities. Alternately, real-estate developers continue their activities without having access to sufficient information about the purchasing power of consumers and housing shortage, and only try to meet the market’s speculative demand.
Iran’s housing market has been on a distinct path for a long time. Unlike other markets, producers in the housing market have not paid attention to the needs of real consumers and their purchasing power; in fact, their goal was not to meet the needs of consumers.
The prime culprit is speculative demand in the market, no question about that. But the lack of a coherent database and the inability of the government to guide the real-estate sector are to blame as well.
The big mistake all Iranian governments made over the past years was that they left housing on its own. Such a policy may produce positive results in other markets but in the housing sector, especially in a country that suffers from a high degree of income inequality and poverty, this would compound the situation.
Since the necessary condition for meaningful intervention in any market is to have detailed information, the government should first reconstruct and complete its real-estate database in order to provide the foundations for a methodical intervention in this key market.
