Title: Navigating the Housing Stalemate: A Political-Economic Analysis of Market Stagnation
Article:
A Market in Stagnation
The Iranian housing market is currently experiencing a period of significant stagnation. A critical analysis reveals a growing disparity between household purchasing power and current real estate prices, creating substantial challenges for families. This situation presents a complex puzzle for policymakers and investors alike, demanding a clear-eyed view of the underlying causes and future trajectory.
Demographic Shifts and Economic Realities
According to Mahmoud Olad, an urban economy researcher and university lecturer, the current market downturn must be viewed through a long-term, demographic lens. He explains that a major demand peak, driven by the large population cohort born in the 1360s (1980s), has now passed.
“The marriage rate, which was nearly one million, has now returned to its pre-peak level of about 400,000 to 500,000,” Olad states. “Consequently, we should not expect a return to the boom scale of the early 1390s (2010s). The annual need for 400,000 to 500,000 housing units is itself mired in this stagnation, visible in both construction and transaction figures.”
The Core Challenge: Eroded Purchasing Power
A central factor in this stagnation is the sharp decline in household purchasing power over the last five to seven years. “People simply cannot afford residential units at current prices,” Olad emphasizes. He notes that even with access to bank loans, the financing covers only a fraction of the total cost.
The situation is compounded by stagnant real per capita income. “Loan installments must be paid with an income that shows no clear prospects for improvement in the future,” he adds. “Therefore, the practical possibility of purchasing a home is severely limited.”
The Regulatory Conundrum
This economic pressure creates a unique challenge in the housing sector. While consumers might typically shift to lower-quality goods when incomes fall, housing is heavily regulated. Building codes, which mandate unit dimensions, parking, facades, and other requirements, maintain a baseline for quality but also contribute to production costs.
Olad highlights the resulting mismatch: “With the declining purchasing power of households, there is a disconnect. When producers cannot easily reduce quality to lower costs, people are pushed out of the formal market, which deepens the stagnation.” He warns that suppressing genuine housing needs could risk the expansion of informal, substandard housing solutions.
A Cautious Outlook
Looking ahead, the short-term outlook remains cautious. “Without a specific development to improve the situation, a significantly positive short-term perspective is not visible,” Olad assesses. He points out that even a general economic recovery would not instantly restore public purchasing power.
The expert concludes that the key to revitalizing the market may lie in fostering economic confidence. “If a perspective and hope for future income takes shape, people could invest or take loans based on anticipated future earnings. However, if such a perspective does not form, a genuine recovery in the housing sector and an exit from this stagnation seem unlikely.” This underscores the broader political-economic interplay between national economic stability and sector-specific vitality.