New Housing Loans Limping
Economy, Business And Markets

New Housing Loans Limping

Trends in Tehran’s housing prices decry the bitter truth that it is grappling with recession since November 2013 with no signs of respite any time soon.  However, data shows that home sales have been on the rise in the month that ended on May 20.
Yet, the purported positive signs in home deals are less than what market observers and housing experts had anticipated. One of the first questions for the public is why the variety of housing loans and mortgages offered by the government have failed to revitalize the key housing sector.
In an opinion piece for Financial Tribune’s sister publication, Donya-e-Eqtesad, Tahmasb Mazaheri, a former governor of the Central Bank of Iran has expressed his views on the issue and analyzed the morass in the property market.
“Loans aimed to support the supply and demand sides in the housing market are largely directives (on paper). What is needed is that these schemes should come into effect without much delay,” Mazaheri wrote. The government should help provide the necessary resources for funding the schemes if real reenergizing of the property market is the aim, he says.
The second point Mazaheri raised regarding the loans was “poor publicity and marketing” of the schemes. He said that merely endorsing the projects is not enough. “The government and Bank Maskan should inform people of the existence of the packages and their terms and conditions.”
The government and Bank Maskan (the main provider of housing mortgage) need to expand the reach of the loans while letting go of some of the prerequisites. “A number of changes should be made. Some requirements should be eased like the long depositing period, conditions regarding first-time homebuyers and the likes.”

  Macroeconomic Issues
Seeing the housing industry on a different page than the macroeconomic conditions of the economy is incorrect according to Mazaheri. Conditions at the macroeconomic level indeed affect all sectors, the property market in particular, he opined. “Economic growth in FY 2015-16 was negative. Insofar as the domestic economy is struggling we simply cannot expect the housing market to improve.”
He is of the belief that resuscitating the housing sector is the function of the demand side. “Lifting demand is possible only when the economy starts moving  at the macroeconomic level.”

  Supply Excess
The other phenomenon in the property market is the existence of vacant homes. The large number of empty properties are usually in the form of big apartments built higher profit. “Imposing taxes on these houses is one of the policies seen in many countries,” especially in large metropolises facing housing shortages and rents going through the roof.
  Distressed Urban Areas
Mazaheri reflected also on the distressed urban areas. He said the government should pay special attention to these areas for a number of reasons, namely supporting those at the lower-end of the economic ladder. “In addition to economic goals, social support is taken into consideration by policymakers wanting to help encourage construction in distressed urban areas.”
Mazaheri was cognizant of the fact that different packages have been designed to encourage housing construction in these areas but resulted in lower levels of success than had been expected. “The pace of construction in these areas is not as rapid as expected.”  Another hurdle in the way of increasing construction in these areas has to do with the attitude and approach of municipalities. “The complexities and bureaucracies do not encourage big overhauls in the distressed urban areas,” he rued.

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