Economy, Business And Markets

Akhoundi: Gov’t Redefining Paradigms of Housing Industry

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Plans and policies crafted three to four decades ago will not solve today’s problems. Mass housing constructions are not the solution any more
The 16th Conference on Housing Development Policies was held on Monday in University of Tehran
The 16th Conference on Housing Development Policies was held on Monday in University of Tehran

Adjusting to time and needs and addressing the mounting challenges of the housing market has emerged as a preoccupation of the Ministry of Roads and Urban Development, according to the minister.

“The housing sector incorporates a chain of institutions, ranging from households -- on the demand side -- to development banks, municipalities, and other bodies. The housing market was indeed a mess when this government took over (in 2013),” Abbas Akhoundi told the 16th Conference on Housing Development Policies Monday in University of Tehran.

Upsetting the operational mechanisms of the housing market in the previous administration has indeed altered the view and behavior of market players, “Causing obstacles for policymakers.”

“Misguided policies almost ruined the culture of savings, which had been ingrained in and encouraged by families over decades,” the minister rued.

According to the banking data, three million people had saving accounts in 2004 (before the Mahmoud Ahmadinejad was elected president).”

The Mehr project is a large-scale construction program initiated in 2007 by the previous administration to provide two million low-income people with housing units through free land and cheap credits.

Akhoundi went on to add that, “Back in 2005, the previous government was privatizing state-owned companies including the Telecommunication Company of Iran. But out of the blue, it started to interfere in the housing market, which was traditionally the function of private enterprise.”

Before the unwanted, unhelpful and apparently disastrous interference in the key housing industry “major builders used to be a key part of the market because they were willing and able to accept high risks. However, as time went by, they had to reduce their roles to contractors…”

 Need for Innovation

Consequently, fundamental issues like neighborhoods, mass building, banks and savings have all been taken for granted, which Akhoundi believes, “is caused by lack of a clear understanding about the problems.”

The MRUD has focused on the notion of home buying through savings. Bank Maskan has established housing saving accounts to serve this purpose, providing applicants with loans at 9%.

Solutions to the housing market are in large part a response to the growing population “while the population and the number of housing units are now almost balanced in most urban areas.”

Plans and policies crafted “three or four decades ago will not solve today’s problems,” Akhoundi said. “Mass housing constructions are not the solution any more. There is no demand for an estimated 166,000 units built under the Mehr Housing Project.”

 Efficient policies to develop the housing sector should include all the relevant players in the market, he stressed. “This is the basis of all decisions made by the ministry.”

Elaborating the point, he said, “Even if we decided to go for mass constructions (low-cost housing), we first need to develop industrial technology.”

The minister went on to say that renovating distressed urban areas and improving the living conditions on the periphery of urban areas are of higher importance.

“This means that we should improve the quality of urban life.”

Thus, building massive housing projects in the vicinity of cities or turning green spaces into monsters of steel structures cannot and will not serve the purpose, the minister warned.

“We need to revive the Iranian urban lifestyle, which has roots in our culture. Neighborhoods and the unique Iranian architecture have been prominent features of our urban life style” for extended periods of time.”

  On the sidelines of the event, the minister told the press that his ministry is preparing the grounds for turning Bank Maskan (main housing bank) into a developmental bank, which would help the lender  play a more significant role in the market.

He added that the new social housing plan under the watch of the present government would be implemented once the costly and controversial Mehr Housing Project is over.

 Lack of infrastructure development has been a major impediment of the multi-billion dollar low-cost Mehr housing scheme launched by the previous administration. The Minister of Roads and Urban Development Abbas Akhoundi has said the new units would be delivered only after improving the infrastructure. The vital role that the housing market plays in Iran’s economy demands swift action to address the crisis. The industry is said to comprise 20% of the gross domestic product and control 13% of the job market.


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