New Housing Program Launched in Iran

Since the construction of 180,000 residential units has already begun, the ministry will conduct province-by-province registration of eligible applicants.

Having been piloted in Kerman Province to gauge the market response, the initial phase of the registration process will start in Qom, Hamedan, Sistan-Baluchestan, Ardabil and Zanjan and continue in other Iranian provinces, IRNA reported. 

“Being married, having no record of using governmental financial facilities for purchasing a house and having lived in the city where applications for the affordable housing program are being submitted are three eligibility requirements for the National Housing Initiative,” Financial Tribune quoted him as saying.

Managing Director of Bank Maskan, the agent bank of Iran's housing sector, Abolqasem Rahimi Anaraki, says those who have applied for home loans under the Housing Savings Account scheme with Bank Maskan will have priority over other applicants when it comes to enjoying facilities available through the National Housing Initiative. 

The HSA applicants are first-time prospective homebuyers from middle-class backgrounds. The scheme has been aimed at increasing home ownership among the youth.

It requires applicants to make an initial deposit (400 million rials or $3,587) and wait out the one-year maturity period for credits with a ceiling of 800 million rials ($7,174), plus the depositor’s down payment, in the capital Tehran. 

In towns with a population of over 200,000, the cap on the loans is at 600 million rials ($5,381). Buyers in towns with a population of under 200,000 can apply for a loan worth 400 million rials. 

When the scheme was first launched, the loan’s interest rate was set at 14%. In February 2017, after a directive by the Money and Credit Council, they were reduced to 9.5% in general cases and 8% for those who wanted to buy a home in deprived parts of the cities.  

“However, those who want to take out HSA loans to buy homes built under the National Housing Initiative need to make an initial deposit of 135 million rials ($1,210) in Tehran, 100 million rials ($896) in towns with a population of over 200,000 and 67 million rials ($600) in other towns,” Rahimi said. 

“These loans’ interest rates are set at 6% for homes located in deprived areas and 8% for homes in other parts of the cities. Furthermore, applicants need to wait out the three-year maturity period for credits worth 800 million rials, 600 million rials and 400 million rials.”

The managing director of Bank Maskan said 350,000 of those who have HSA deposit accounts are eligible for facilities of National Housing Initiative. 

Out of a total of 400,000 homes planned to be constructed as per the Roads and Urban Development Ministry’s National Housing Initiative over two years (March 2019-2021), New Towns Development Company will build 200,000, the Urban Development and Renovation Company 100,000 and the Housing Foundation of the Islamic Republic of Iran will construct the remaining 100,000 residential units over three years.

Nearly 20,000 of these residential units will be constructed in new satellite cities, including 7,134 in Fooladshahr in Isfahan Province, 4,448 in Parand in Tehran Province, 2,762 in Golbahar in Khorasan Razavi, 1,547 in Sahand in East Azarbaijan Province, 1,497 in Sadra in Fars Province, 800 in Amirkabir in Markazi Province, 520 in Hashtgerd in Alborz Province, and 150 in Pardis in Tehran. 

Supply Deficit

Iran's housing market is bracing for inflationary recession because of a widening home supply deficit, according to Fardin Yazdani, the Comprehensive Housing Plan’s deputy for research.

Referring to increasing home prices and the declining number of home deals, Yazdani said the main reason for this is that the housing sector has failed to boost production.

"In other words, despite strong demand in the housing market last year, the supply side has failed to catch up," he was quoted as saying by the news service of the Ministry of Roads and Urban Development.

The Statistical Center of Iran's latest report on the country's real-estate market showed the average price of each square meter of residential floor area surged by 82.2% in the first quarter of the current Iranian year (March 21-June 21) on a year-on-year basis. 

Compared with the previous quarter, prices saw a 20.7% growth. 

The minimum price of each square meter of residential floor area in Q1 stood at 1.06 million rials ($9.5) with the maximum price registered at 668.18 million rials ($5,992). 

The average price was about 35.31 million rials ($316).

In terms of the number of deals for residential floor areas, the current year’s Q1 saw a decline of 24.6% compared with Q1 last year. 

Against Q4 last year, the number of home deals saw a decline of 13.2%. 

High Price of Land, Construction Materials

Yazdani referred to the high prices of land and construction materials as the main reason for the lack of housing production.

"Under the circumstances, builders are not finding the housing market as lucrative as other markets," he said.

The general price index of construction materials for residential units in Tehran rose 29% during the second quarter of the current Iranian year that ended on Sept. 22 (summer) compared with last year's corresponding period.

According to the Statistical Center of Iran's latest report published on its website, the index stood at 407 during the period under review. The figure indicates almost no change compared with the previous quarter, i.e. the first quarter of the current year (spring), which ended on June 21. 

Q1 construction material price index stood at 406.9. 

During the four quarters ending Sept. 22, the index grew by 49.2% compared with the previous year's corresponding period.

“The supply of homes has decreased by 50% over the past five years. However, there is no guarantee that the housing affordability problem will go away, even if the government’s new initiative to help build 400,000 new homes proves to be successful,” Hossein Afshin, an official with Majlis Research Center, has been quoted as saying by ILNA.

Afshin noted that from the fiscal 2006-7 to 2015-16, as many as 10.5 million homes were built in the country but only 2.5 million were put at the disposal of people.