Skyrocketing housing prices in Iran

Analysis by PMOI/MEK

Iran, June 20, 2021—In Iran under the ruling mullahs’ regime, real statistics are a matter of security, confidentiality and out of reach for the public. Specialized institutions refer to some of the relevant statistics from time to time to avoid responsibility and accountability. For example, this spring, which is usually the season when tenants across Iran move to new homes, 40 percent of Iran’s families are tenants, and most of them must look for a smaller house in poorer areas after a year or two.

In May, the Central Bank of Iran published a report covering developments in Tehran’s housing market. The average purchase and sale price of one square meter of a residential unit through real estate agencies in the Iranian capital was 288 million rials (approx. $1,152).

Triple increase in rent

Looking at the statistics published by government institutions in Iran, we see that since 1986, the number of tenants in Iran has more than tripled.

“In 1986, when the first general population and housing census was conducted in Iran, only 13 percent of the urban population were tenants. The country had a population of about 49 million that year. In 1966, when the country had reached more than 60 million people, about 16 percent were tenants. In 2006, Iran’s population rose above the 70 million mark and about 24 percent of urban families were living as tenants. This rate increased to about 31 percent in 2016, while we had more than 18 million households with an overall population of 80 million. Today, however, while we have reached a population of 83 million, 40 percent of urban households are tenants,” according to a June 2 report published in the Jahan news daily.

The share of housing from the household budget

A look at the current housing prices in Iran and average budget Iranian families, clearly this burden is increasing day by day.

“While studies have shown that in 1996, less than 30 percent of a household budget were allocated to housing. This figure reached more than 36 percent of household expenditures in 2016, and unfortunately this year, about 45 percent of a tenant household’s expenditures include housing and rent,” according to the Khorasan daily on June 3.

Now, how can a worker, if not unemployed, afford a rent with a salary of 27.5 million rials (approx. $110) per month without even considering the remaining expenses?

The minimum wage and bonuses of workers have reduced by 50 percent from $ 250 in 2011 to $110 in 2021.

Failed national housing plan

In the ongoing crises and challenges that the regime is facing, there are so many cases of corruption, theft, rent and waste of national capital that the mullahs’ apparatus pays no attention to the housing dilemma.

One example is the regime’s successive failures in providing housing and constructing dormitories.

After regime president Hassan Rouhani came into office in 2013, his government’s “National Housing” plan replaced former president Mahmoud Ahmadinejad’s “Mehr Housing” project to supposedly correct its shortcomings.

Under the plan, 100,000 of 400,000 housing units were to be built to replace older homes, and 300,000 units were to be built for low-income families. However, reports indicate that Rouhani’s initiative has also failed.

The houses built under these government-led plans have become the source of many problems.

An example is the Maskan-e-Mehr housing project, which has turned out to be a total waste of national capital.

Government experts have questioned why the “National Housing plan”, supposed to help improve housing conditions, is on the verge of failure.

“Initially, the construction cost per square meter of each residential unit in this project was estimated between 2.5 million to 3/5 million rials (about $100 to$140). Yet as inflation rates rose, the construction cost increased to 50 to 60 million rials (about $200 to $240). Therefore, the total cost of each unit is about four to 4.8 billion rials (approx. $16,000 to $19,200), of which a loan of one billion rials (about$ 4,000) with an interest rate of 18 percent will only cover a portion of it,” according to an April 20 report published by the Donyaye-eghtesad daily.

The plan was supposed to be completed by the end of Rouhani’s tenure. With the failure of this initiative, however, the housing crisis will only escalate.

Empty House Tax Law; Inefficient and absurd

Although the law has not yet been implemented, most experts consider it inefficient and absurd, or believe that its use in the country is incorrect.

“Experts believe that this plan not only fails to control prices, but can have the opposite impact and divert people’s capital to other markets, such as gold coins, currency and cars, which may also increase disorder,” according to a May 29 report by the Melke7 daily.

Other reasons to oppose the plan include the lack of a strong and appropriate database in the housing sector and the lack of accurate identification of empty houses without tenants. It shows that with the implementation of this law, only the government’s tax revenues will increase.

Banks and raising housing prices

Banking experts, on the other hand, believe that the government and the Central Bank took millions of people’s homes to save the country’s banks from bankruptcy.

“Iranian banks, which have been doing business for years and have bought and set aside significant assets, have insisted on raising housing prices far too high to balance their debt and asset imbalances. In the last eight years, the entire Iranian economy has served the bank’s profit-seeking goals, meaning that the country’s economy has been taken hostage by the banks,” according to a May 29 report by the Akhbaresanat daily.

Ebrahim Raisi’s housing construction promises

With a record of 16 years of recession in the supply of housing, the alarm has been sounded in Iran.

“Last year, the construction of 53,400 housing units were started, being the lowest since 2004. This very large record in the housing has been recorded after five years of recession, which is a threat to the housing market,” according to a May 23 report by the Eghtesad Online daily.

Last year’s housing recession could pose as a significant threat for 2021 and even 2022 in the housing markets.

“I have told young people to get married. We will be seeking to build houses for them from the first day in office, and I think it will be possible to build four million house in four years,” said Ebrahim Raisi, according to the Khabaronline daily on June 1.

Home, an irreplaceable need

Now let’s take a look at the harsh circumstances in Iran these days as people are barely making ends meet. Some food items are being replaced with low-quality alternatives at cheaper prices. Some families have removed meat from their diet and are consuming vegetables instead as more people fall deeper into absolute poverty. Some are forgoing new clothing and wearing their threadbare clothes.

However, providing shelter for the family is not something to be ignored unless you expect people to start living in tents and caves.

In Iran, even housing has become a luxury. There are many reports of “grave living”, “roof renting,” and “sleeping in shops,” especially among workers.

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