decrease in housing prices; Will the code name of steel and cement mafia/ rent production factory be activated?

According to Tejarat News, while the government claims to have reduced housing prices by 20-25% in the past months, now the Minister of Roads and Urban Development has announced that in the upcoming meeting of the Supreme Housing Council, cement and steel will be withdrawn from the commodity exchange with the aim of reducing The price of housing should be examined. In this way, it is not clear whether to believe the government news about housing becoming cheaper or the rooster’s tail? Especially since for months, no official statistics of housing market developments have been published.

Efforts for command pricing and rent generation

Proponents of command pricing and rentiers have entered the field in every era with a new way to manipulate the market in a way that serves their interests. This effort became more visible especially when the dispute over the entry of steel into the commodity exchange was raised. After that, the controversy over cement transactions in the commodity exchange became a new arena for rentiers in favor of mandatory pricing.

Now, these two products have again attracted the attention of rent fans under the pretext of housing price reduction. In this regard, Mehrdad Bazarpash, the Minister of Roads and Urban Development, whose ministry under his command has failed badly in advancing the National Housing Movement and managing the buying, selling and renting market, and has shown its inefficiency, has claimed that one of the factors in the increase in housing prices is the high cost of housing. It is construction materials, and this important issue is on the agenda of the meeting of the Supreme Housing Council, which will be discussed and decided next week in the presence of the president.

The contribution of cement and steel to the cost of housing construction

Meanwhile, the governments, along with the beneficiaries of the command economy, claim that the cement and steel offered in the commodity exchange have raised the price of housing, and studies show that these two products account for a small share in comparison with other construction costs; So that although the costs are slightly different in different construction methods, but generally cement accounts for only 2.5% of the cost of building a house. Although the share of steel is estimated to be around 35%, it is not very noticeable compared to the share of more than 70% of the cost of land and construction permits. However, why is the price of housing used as an excuse to withdraw cement and steel from the stock market?

The big profit, which is generally referred to as rent, is the difference between the price of cement and steel at the factory door (order price) and the price of these two products in the open market. However, the path of this abundant profit was completely blocked by the entry of cement and steel goods into the commodity exchange, forcing the beneficiaries to knock on any door to remove the barrier of the commodity exchange.

Now housing inflation has become an excuse for the beneficiaries of the black market of steel and cement to reactivate and try to remove these two goods from the glass room of the stock exchange by exerting influence in the decision-making circles. In the meantime, some experts and members of the parliament, probably without knowing about the rent that will be given to some special streams when cement and steel leave the commodity exchange, have joined forces with the attackers of the transparent trading of the commodity exchange and attributed the supply of products in this market as the reason. They call it the high cost of housing.

This consensus has gone so far that even the reason for the early failure of the national housing movement plan is the supply of steel and cement in the commodity exchange! This is despite the fact that in the last two years (even according to government officials), the lack of land and its high price have been declared as one of the most important factors in the failure of this project!

It should be noted that the latest report on the price changes of construction inputs in the spring of 1402 shows that the highest growth percentage was related to electrical installations and the lowest growth was related to cement!

The duty of the government to finance the construction of the national housing movement

The national housing movement plan, which was the big promise of the Ebrahim Raeesi government, and now the cause of its failure is the supply of steel and cement in the commodity exchange, was proposed based on the law on the jump in housing production (approved by the parliament in 1400). In the meantime, the third chapter of the housing production jump law is focused on providing building materials.

Article 13 of this plan has emphasized that the Ministry of Economic Affairs and Finance is obliged to provide pre-purchase and other means of covering the risk of buying construction materials (only steel and cement) in the Commodity Exchange in order to cover the risk of housing construction. In this way, this article clearly states that the supply route for cement and steel construction materials is the commodity exchange, and it is the Ministry of Economy that is obliged to facilitate this route. However, the supporters of rent are now thinking of bypassing this path and the law of jump in housing production.

Note (1) of Article 13 also obliges the Ministry of Roads, Urban Development, and Peace to prepare the regulations related to the provision of construction materials (steel and cement) for supportive housing projects (with the elimination of intermediaries) and submit them to the Cabinet for approval. In this note, it is emphasized on the elimination of middlemen, which is mandatory in a serious confrontation with the stakeholders of the economy.

In note (2) of this legal article, it is also emphasized that the Ministry of Economic Affairs and Finance is obliged to provide the possibility of purchasing construction materials from the “Exchange” for the builders of supportive housing with the introduction of the Ministry of Roads and Urban Development.

In this way, even based on the housing production jump law on which the 13th government has based its housing plan, the direction of the commodity exchange in providing construction materials has been emphasized. Based on this, one should ask whose interest has caused the Minister of Roads and Urban Development to announce the review of the withdrawal of steel and cement from the Commodity Exchange in the Supreme Housing Council.

Read more reports on the housing page.

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