Economy, Business And Markets

Smaller Better Than Bigger

Smaller Better Than Bigger Smaller Better Than Bigger

In the framework of its declared housing policy and to help people own their own homes in safe, uncongested and compliant environs, the government has prioritized the development of medium-size towns, Abbas Akhundi, minister of roads and urban development said Saturday.

“Expanding big cities is not a priority simply because they create more problems. We want to expand middle-size towns by providing loans,” he was quoted as saying in a meeting with members of the Housing Foundation of the Islamic Foundation, the ministry’s website reported.

Loans provided by Bank Maskan cover 60-70% of a housing unit’s price in mid-sized towns, he noted, adding that the government’s recent mortgage scheme through deposits has been welcomed in the townships.

Akhundi pointed to worrying demographic shifts in the country saying that in the 1950s-60s Iran had a population of 30 million, 70% of which lived in rural areas. “Now Iran’s population is nearing 85 million with 70% living in urban areas.”

He went on to say that “Now 65 million people live in cities indicating that the urban population has increased tenfold in 50 years. However, the increase in the urban population and the immigration to cities has slowed down considerably in recent years.”

Pointing to other changes in population trends, he said the size of households has shrunk. In the past households on average consisted of five members but now there are less than three in a household. “As a result the demand (for smaller homes) has increased. Housing needs and patterns have changed and we have to move toward smaller units.”

 Rehab Plans

He pointed to the old and dilapidated structures and architecture of buildings in the cities saying the trend is visible in almost all cities. Meanwhile, informal settlements in and around cities are also expanding at a rapid pace, the minister lamented. “This has created problems including security concerns.  Transportation, traffic and the increase in land prices are the other problems.”

The close aide and confidante of the president said his ministry and the government also pursuing policies to renew and refurbish cities’ central and downtown areas. “The president has welcomed the (renovation) scheme and promised support. If we really want to promote Islamic architecture we should return to the city centers, not expand informal settlements.”

 New Towns

Establishing new towns is among the ministry’s policies to increase supply of housing that in turn serves as a response to the rapid expansion of megacities. “We want to build new cities in regions where we can create jobs like Chabahar Port, Asaluyeh in Bushehr Province, Jask and Bandar Abbas in Hormozgan Province

Referring to the decline in the density of population in the southern parts of the country he said the ministry has plans to build new cities in the south.

To help finance the relevant projects and build new towns funds will be set up similar to the one for the sprawling Ekbatan housing complex west of Tehran.

 Facilitating Loans

Akhundi said his ministry is trying to increase the repayment period for housing loans while decreasing lending rates. “We had repayment periods of 15-20 years for loans in past and hope to extend the period for the present mortgages as well.”

“If approved by lawmakers in 2016-17 budget, Bank Maskan’s capital will be more than tripled.”

Housing loans need to increase and Bank Maskan should be transformed into a development bank, he added. “Maskan loans are now offered at 13% that is the lowest in the domestic banking industry. But this could be lowered further.”