Title: Navigating the Housing Stalemate: Economic Stability Hinges on Resolving Market Stagnation
Introduction: A Deepening Challenge
The Iranian housing market has entered a new phase of crisis, characterized by a severe stagnation in transactions and a marked decline in construction activity. This prolonged downturn is placing significant pressure on household livelihoods and, according to economic experts, poses a serious threat to the nation’s broader economic stability. The continuation of these conditions risks triggering widespread negative consequences for employment, investment, and the general inflation rate.
Supply and Demand: A Broken Cycle
A critical imbalance between supply and demand lies at the heart of the issue. With household purchasing power weakened, builders are increasingly reluctant to initiate new projects. This has effectively halted the market’s natural cycle. The long-term nature of this stagnation is amplifying losses for both buyers and sellers, bringing the signs of a full-blown housing crisis into sharper focus. Official reports cited by parliamentary representatives indicate a national shortage of approximately seven million residential units. Analysts suggest that had the country maintained an annual construction rate of one million units since the early 2010s, the current crisis could have been averted.
Economic Pressures and Construction Paralysis
The broader, unsettled economic climate has driven construction activity to its lowest levels, particularly in major cities where costs have multiplied and returns have diminished. While the quality of new buildings has been maintained, thanks to modern technology and advanced engineering knowledge, the sheer volume of production has plummeted. This exodus of builders from the market could have irreversible long-term consequences for the housing sector’s economy.
Policy Challenges and Pent-Up Demand
Siamak Pirbabaei, a member of the board of directors of the Building Industry Association, has highlighted the alarming level of pent-up demand in the market. He emphasized that the program to build one million housing units annually was formulated based on expert studies. Pirbabaei believes the primary solution to this crisis lies in creating conditions that enhance the purchasing power of applicants, as the market will remain stagnant without real buyers.
The Role of Financial Facilities
Pointing to international models, Pirbabaei noted that in many countries, homebuyers provide only 10 to 20 percent of a property’s value as a down payment, with the remainder covered by long-term loans. He proposed that the government expand housing purchase and rental facilities to address a portion of the urgent needs of households.
A Temporary Lull in Price Hikes
Market analysts observe that the current rate of price increase in the housing sector is presently lower than the general inflation rate, which stands at approximately 40 percent. However, they caution that the sharp reduction in supply in the coming years could lead to a resurgence of severe price hikes, thereby intensifying the crisis.
Profitability and Builder Incentives
Pirbabaei also warned that the current disproportionate and high-risk profit margins are reducing the incentive for builders. He stated that the continuation of this trend could lead to a further exodus of construction firms and create even larger market disruptions.
Conclusion: Quality vs. Quantity
The central dilemma of the Iranian housing market is now a clear imbalance between maintained quality and insufficient quantity. While societal demand has shifted towards quality housing, the construction capacity is unable to meet the accumulated demand. Resolving this stalemate is crucial for restoring balance to a sector vital to the nation’s economic health.