March 15, 2024
According to a report by the research arm of the Majlis, average home prices in Tehran have increased by more than 950 percent over the past five years. The Majlis Research Center (MRC) said, “The conditions are even more severe and complicated when it comes to rental housing, as tenants are facing increasing eviction.”
The MRC mentioned commonly cited causes for the crisis in the housing sector, such as the inadequate supply of homes, which stems from the decline in new construction and increase in population, partly due to the migration to metropolitan areas.
But the MRC says improving the supply of housing runs head-on into the fact that so many households cannot afford the houses that are being built in Tehran. That is largely the result of the fact that so many house buyers are using the houses as a means of investment to overcome inflation.
Economist Nasser Zakeri recently discussed this in an article for the daily Sharq. He said the government is to blame for three developments that cause the housing crisis.
The first is the exorbitant increase in liquidity. Over the last four decades, liquidity has increased more than 9,000 times. And that drives inflation.
The second is the very asymmetric distribution of liquidity among citizens. While many citizens face numerous hurdles just to get a small loan, “special” customers of the banking system are given huge loans with exemplary ease and they don’t even bother about repayment.
The third problem, he said, is the huge portion of liquidity found in the housing market. While the economy is caught in a recessi owners of liquid funds buy real estate as a low-hassle, high-yield investment, driving up housing prices.
“The boom in real-estate development in large cities, especially in 1960s Tehran, and the inaction on the part of government officials in the face of housing challenges can be seen as one of the first cases of conflict of interest in the formation of the housing crisis. In those days and when the migration to Tehran has accelerated, some influential capitalists who had connections with the ruling power, began to accumulate wealth via buying and selling large plots of land located within Tehran and its suburbs,” he said.