Today, a large fraction of the Iranian population have experienced difficulties related to housing and living conditions.
According to unofficial statistics, up to 50% of the population of Tehran are living in rented homes, which figure stands at 40% for the whole country. In addition, 40% of the population are living in poor housing conditions, which do not have adequate amenities. Many homes are not safe to withstand natural disasters such as earthquakes. On top of that, the citizens of large cities are also suffering from poor urban transportation and traffic congestion.
It is natural that when a large group of citizens are struggling to find proper housing, the current situation cannot be described as “housing problem”; we need to speak of “housing crisis”. These were stated by Nasser Zakeri, an economist, in a write-up for the Persian daily Shargh. A translation of the text follows:
The housing crisis in Iran, which has emanated from the persistence of inefficient macroeconomic policies and inaction on the part of authorities for the past 70 years, has inflicted three deep wounds in the body of the national economy, the treatment of which requires a huge effort.
Households Livelihood Hard Hit
The housing crisis has hit the livelihood of low-income households and even the middle class.
With tenancy on the rise — it has even become common in rural areas — the population of the country has practically been divided into two distinct groups of home owners and tenants, whose economic and social relations are reminiscent of that of lords and serfs in the 1950s.
Having to pay the lion’s share of their income for renting a home, many residents in Tehran should forget about all their other needs to be able to pay their monthly rent on time. Of course, paying such a huge sum has dealt a heavy blow to the livelihood of households.
Foundation of National Economy Destroyed
The housing crisis has severely destroyed the foundations of the national economy.
To better understand this point, it is enough to pay attention to the fact that the value of rental residential units in Tehran is almost equal to half the value of Tehran Stock Exchange. This comes as only a part of the country’s stock market assets — and not all of them — is owned by real persons and the private sector. In other words, the boom in real-estate sector and the inaction of the officials have created a situation in which the wealthy purchase real-estate instead of making investment in the stock market. By doing so, they are tightening the screws on low-income people.
In fact, the government increases the volume of liquidity and paves the way for the formation of two-digit inflation. By slacking (failing to direct excess liquidity toward production), the government has also allowed the growth of speculative demand.
Environmental Damage
The housing crisis has also damaged Iran’s natural environment. The population of Tehran increased by 6.3% between the fiscal 1939-40 and 1956-57. This rapid growth continued into the following years; Tehran became largely populated, the lands around the city were destroyed and turned into residential settlements. The same changes happened throughout the country.
The concentration of people in a small part of Iran made the best agricultural lands unavailable. The garbage and urban sewage also destroyed the underground water reservoirs.
In the beginning of the 1970s, the studies on land development plan suggested that the government should get ready for large-scale migrations and the settlement of the population along the southern coasts, given the country’s water shortages. The government failed to heed this warning.
In recent decades, this attracted the attention of the government but not sufficiently and southern coasts development projects were included in its national plans.
The national economy is suffering from the effects of these three wounds; the country needs to use all its resources to treat the wounds and alleviate the pain. Premature, hasty plans such as increasing the loan ceiling are not the solution; they produce no result other than compounding the situation.
The government should prepare a comprehensive plan at short-, medium- and long-term levels to deal with this crisis by referring to experts and using their knowledge. Managing the rental housing market and preventing the unreasonable increase in housing rents are the first step. The communication of decisions without guarantee of implementation, as was the case in the past four years, will not help resolve the problem.
