housing construction; The only solution to the rent crisis – Tejaratnews

According to Tejarat News, in recent years, the lack of proper supply of housing and the subsequent increase in price has caused the quantity and price of housing supply to be inconsistent with the existing demand. This disproportion between supply and demand has caused the middle classes of the society to lose the financial ability to buy a house and to resort to renting.

The dramatic increase in house rent in the last few years has faced many problems for a large part of the society, especially the low and middle income groups. So that today in some areas of Tehran, not even the entire income of a family is enough to pay the rent. Therefore, this need requires the government to seriously provide a solution for a sustainable solution to the housing problem.

High rental rate and rent in Iran

Examining the process of housing occupation by households in the country shows that the percentage of renter families has increased more than twice in the last two decades. In addition, the high rent price also indicates the unfavorable situation of the housing rental market in the country.

According to the statistics of the central bank, on average, housing costs constitute 40% of the household budget. This situation is worse in Tehran, and in addition to the higher rate of rental housing, more housing costs are imposed on the household. On average, 47% of a family’s expenses in Tehran are related to housing and rent. Meanwhile, this index is approximately 22% in European countries.

In general, housing costs have a large contribution to people’s livelihood problems; Therefore, there is a need for the government to organize this market as soon as possible and reduce the economic pressure on them by reducing the effectiveness of people’s expenses from inflation.

Direct intervention of the government, a quick but ineffective action

In this regard, at the beginning of every year and as the housing transfer season approaches, the government thinks of an immediate solution to this problem and by providing a support package for tenants and determining the price increase ceiling and providing facilities, the policy of rent control and support for tenants is ordered. He does his job.

But in practice, these types of immediate decisions and short-term solutions only relieve the pain of the pain of the house disease and are not a cure for this problem. The proof of this issue is the repetition and renewal of these decisions every year. While year by year, a higher level of pressure is imposed on people from this position.

The problem in this field is the way of looking at this part; The problem of rent increase is basically a complication that is caused by an underlying disease called lack of supply, and it is not possible to provide a solution for it by focusing on the rent issue itself, but it is necessary to pursue the solution of this case in deeper layers.

The opposite result of the intervention

In general, the solutions offered at this level, such as extending the contract, reducing the rent increase ceiling, and making it difficult to obtain an eviction order for the tenant, according to the experience of our country, are not radical and sustainable solutions; Because the correct and effective implementation of this type of policy requires requirements that do not currently exist in our country.

In our country, housing construction has been stagnant for nearly a decade; This incident, with the increase in inflation in the market, has caused housing to become a capital good from a consumer good. In this situation and in the absence of legal deterrence against housing hoarding, increased pressure on owners and lessors can lead to the exit of the property from the market. Because in this case, the owner will benefit from the increase in the value of his property and will have less conflict with the tenant and the government. Therefore, this form of intervention, ultimately by reducing the supply, will cause the house price and rent to increase again.

“Capital and production” is more important than “supply and demand”

Most of these types of policies are presented based on the experience of other countries, and considering the positive results that the countries of origin have obtained from the implementation of these types of policies, some predict these solutions to be effective in Iran as well. But it must be said that this form of modeling is in practice an incomplete adaptation, and for a better conclusion, it is necessary to examine the conditions of the countries more comprehensively and completely.

In the housing market, before the supply and demand relationship, there are other contextual dimensions such as the “production and supply” relationship and the “capital and production” relationship, both of which are influential in determining market conditions. In countries that impose strict protection laws to protect renters, they first impose stricter legislation to prevent capital stagnation in the housing market, thereby increasing both profits and reduce the attractiveness of attracting investment in this unmarketed area and be able to meet the needs of the high-demand rental housing market.

In the deeper layer, in order to move the stagnant liquidity in the housing market and leave it out of capital mode, there should be suitable alternatives to attract capital in other sectors. In countries like the United States that have a good production sector, it is possible to prevent capital from entering the housing market, and this liquidity will flow in the production sector. But in Iran, in the absence of a suitable and attractive alternative in the production sector, it can be predicted that the outflow of capital from the housing market will cause more liquidity to enter the coin and currency market and will actually create harmful results for the country’s economy.

Housing construction, the only solution to the rental crisis

The solution provided to solve the housing problem must both remove the stagnant excess capital in this market and provide a suitable alternative in the production sector for the entry of this capital in order to increase the supply in accordance with the demand by removing the housing from a capital state to a consumer product. .

In the current situation of Iran and the restrictions and financial and economic problems that exist, the least damaging way for this purpose is to increase housing construction with the approach of land supply. In addition to attracting people’s liquidity for the production and construction of housing, this action can boost the production and industrial sector of the country and respond to consumer demand by increasing the supply and reducing the price of housing.

In short, the basic organization of the housing market and rent requires balancing the supply and demand of housing and turning the house from a capital good into a consumer good, which these goals will be realized initially only by building housing.

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