Economy, Business And Markets

$20b Locked in Housing Market

$20b Locked in Housing Market$20b Locked in Housing Market

Excessive housing construction has locked billions of dollars that could be better used in other industries, an advisor to the minister of roads and urban development said.

Construction permits that were easily granted by municipalities and generous housing loans given to major builders and property developers in the past have resulted in an estimated 1.6 million vacant units worth over $20 billion at a time when most sectors of the economy are starved of funds, Ministry of Roads and Urban Development’s news website quoted Hussein Abdo Tabrizi as saying.

During the construction boom era “many buildings that were still strong and inhabitable were demolished to build new and bigger structures.”

Elaborating on the credit crunch faced by the government and private business, Abdo Tabrizi said “In 2012 that was considered a good year under the past administration, annual oil receipts reached $120 billion. However, the piling pressure of the economic sanctions coupled with the plunge in oil prices has reduced revenues to $20 billion this year, almost one sixth of the figure in 2012.”

He praised the Rouhani administration’s efforts to curb inflation from record high of 40% in 2013 to 15% in 2015 but stressed, “Achieving single-digit inflation alone is not enough because the job situation in the country is not good.”

In Iran, dependency ratio is 3.7% which means unemployment of one person can affect the lives of 3.7 persons. The figure at global level is 2.6% and in Europe hardly 1.73%. Iran’s population is about 80 million with 4.5 million university students which is not “normal” compared to global figures, he said.

Abdo Tabrizi noted that lackluster demand cannot be resolved by stop-gap solutions and requires meaningful panacea, which, among other things, would improve household income.