10-Point Strategy for Housing Recovery

These moves are aimed at easing the process of buying an apartment for first-time homebuyers, reducing the population of those living in unfavorable conditions, managing distressed areas and ending the issue of informal settlements, Fars News Agency reported.

The plan, which has been devised with respect to five major issues of the housing sector during 2012-16 and the opinions of the sector's experts to correct the flaws of the previous roadmap, suggests moves that should be implemented during the upcoming four years to end the recession in housing construction and sales.

Crucial Measures

"Making home loans flexible" is the first move proposed by the report, according to Financial Tribune.

Offering a variety of home loans will enable all groups of the society with different economic conditions to benefit from bank home loans.

In this regard, CSS has devised a plan for reforming the home loan system and presented it to the agent bank and the monetary policymaker, i.e. the Central Bank of Iran.

The report marks the "expansion of secondary mortgage market" as the second measure. As the report elaborates, the agent bank can issue participatory bonds for its allocated loans and recover a portion of its primary resources that enable it to offer a bigger volume of loans.

Thus far, Bank Maskan, as the agent bank of the housing sector, has paid out about 1 quadrillion rials ($25.7 billion) worth of loans, which will be repaid in monthly installments over 12 to 15 years. The bank's lending power will be multiplied, if it manages to recover a significant amount of its resources by issuing second mortgage participatory bonds.

The third measure has been referred to as "establishing housing leasing market" to provide average and high-income families with appropriate home loans. The move can affect the market of more expensive homes that have experienced even worse days than other residential units during the years of recession.

"Prevention of selling government lands" has been mentioned in the report as the fourth move to lead the housing market toward prosperity. To do so, the agent bank can issue participatory bonds–backed up by government lands—to absorb the required investments from the private sector to build infrastructures without giving away the government's share from the added value of the lands.

"Leading construction companies and builders to distressed areas" is another measure that allows construction companies to rebuild a whole neighborhood and not just a few old houses. This way, their operations will not be limited to residential units.

"Managing housing sector's deterrent regulations" is also suggested by CSS to housing sector policymakers. For instance, revising the regulations of apartments' pre-sales has been suggested, which can significantly help builders and the housing market.

One of the most important strategic points has been enumerated as "solidification and unification of plans and policies in the housing sector" which suggests the merger of different policymaking bodies in the Ministry of Roads and Urban Development in order to prevent any contradicting policies.

Presidential office's Center for Strategic Studies calls for utmost cooperation among internal and external responsible bodies of housing sector to see the merger through.

"Precise implementation of social housing scheme", along with "matching supply with demand", has also been emphasized in the report.

CSS also refers to a so-called "construction tsunami" that happened between 2009 and 2012 as the major reason for recession in the construction sector in the following years.

The report has enumerated three factors that caused the heavy flow of construction efforts.

According to the report, private sector, organizations and banks made huge investments in the housing sector during the years when banks' interest rates were very low.

On the other hand, CBI used its huge resources in the Mehr Housing scheme, which resulted in the construction of thousands of residential units. The third reason behind the tsunami concerns municipalities as they sold many construction permits for buildings' extra levels.

These three factors triggered the construction of many residential units, which are in stark contrast with the demand in society and resulted in the most severe construction recession in the history of housing sector.