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Command Economy Harms Housing

Command Economy Harms Housing
Command Economy Harms Housing

Real-estate developers and private sector players have to spend six months to a year to secure a construction permit, Farshid Pourhajat, secretary of Mass Builders Association, said in a write-up for the Persian daily Jahan-e Sanat. A translation of the text follows: 
At present, private sector players buy land, secure permits and start housing construction by using their own capital. 
Up to 100,000 units were supposed to be supplied by Sept. 22, 2022. The new government’s housing project did not commence last year. This project can be regarded as the continuation of Mehr Housing Project or the National Housing Initiative. 
I’m not authorized to say why the new government’s housing project has not been commissioned, but the housing production cycle is the same as before. 
Risks and hazards occur at the time of construction. Small projects take at least 24 months and big projects between 36 and 48 months to complete. The real problem is the flawed structure of housing production in Iran. We have failed to shorten this process by using new technologies. We are operating in a system within the institutionalized command economy. 
We even face problems in employing engineers who are entangled in the Iran Construction Engineering Organization’s faulty system that has not been fixed yet. The beneficiaries of this wrong system are opposed to reforms. 
The fact that 100,000 units were not supplied should be investigated by the Ministry of Roads and Urban Development. Inflation might be the reason behind this failure, as it could have impacted the prices of construction materials. 
Controlling inflation by the government is key to reducing the end price of housing.
The private sector can’t interfere in this matter. Governments must plan and have a policy to stabilize the economy. Bureaucratic hurdles should also be cleared. Nowhere in the world you would face such restrictions in making investment.
Return on investment surely affects the end price of housing. When housing projects prolong, the profitability of investment reduces and losses are inflicted on producers, all these ultimately hurt home buyers.
 

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