Two deviations in the national housing movement – Tejaratnews
According to Tejarat News, what actions should the new Minister of Roads and Urban Development take in order to complete the one million housing project?
In order to guide the one million housing project to the desired destination of the government and the people, he must remove the construction projects of the plan from two deviations before solving the issue of “financing” – which is apparently the most important concern of the project agents. The first deviation is the significant gap between contract prices and the real cost of housing construction, the consequences of which have currently caused “the unattractiveness of the plan for construction contractors” and “the very slow speed of these constructions”. The second deviation is towards Tehran and the most luxurious area of the city.
The reality of the plan that is currently being implemented to build one million state-owned housing units, indicates the existence of two major deviations in this plan.
“Economic World” surveys, while identifying two major deviations in the pricing and location of these units in the country and Tehran, a fundamental question in this regard is whether the new Minister of Roads and Urban Development is aware of the reality of this national plan and deviations. Does anyone know where it is? The most important deviation is related to the deep gap that exists between the actual cost of building housing and the price of construction of state-owned units in the contracts that have been concluded so far between the government and contractors for the construction of one million housing units. Investigations show that not only in the first year of the implementation of this project, but also in the second year, the contracts are actually concluded between the government and the contractors at a lower price than the actual costs of the construction day.
Although the government’s goal of this work is to reduce the finished price and, as a result, the units will be cheaper for applicants and pre-buyers, but in practice this action will not only lead to cheaper prices, but also due to the disagreement of a large group of manufacturers and contractors with these numbers to enter the Projects, practically, the work will be accompanied by a time delay. This is despite the fact that even if the contractors accept these figures and sign a contract with the government to build housing at a price lower than the daily cost, they will not be able to complete the work on time and at the specified price.
Therefore, in both cases, due to the project dealing with more construction inflation and the lack of provision of the required resources in accordance with the realities of the construction market, practically not only the units will not be built cheaper than the market price, but the units will cost more and in a longer time to the applicants and Pre-orders will be delivered. At the same time, due to the impact of the projects with inflation, the growth of the construction cost and the increase in the finished price of the units, some of the projects are associated with the drop of applicants. Because due to the increase in price and the lengthening of the construction process, basically a group of applicants and pre-buyers will not be able to provide the difference related to the applicant’s contribution due to special economic conditions.
Failure of contracts with “price of the day”
According to the report of “Economic World”, regardless of whether the policy that is considered to solve the housing problem at the current point in time in the form of the annual construction of one million government-built residential units, is feasible or unrealizable, this plan even if Implementation with the same circulation as announced by the officials has included at least two major deviations in terms of how the price is determined in the government’s contracts with contractors, as well as the location designated for the construction of some of these units. In fact, in a situation where the record of the first year of the implementation of this plan shows the failure to realize the annual construction plan of one million houses in the country, and also many experts and economic experts do not evaluate the implementation of this plan as an operational and successful plan from various aspects, even if If this plan is fully implemented and the annual construction of one million houses is keyed, there are still two major deviations in this policy. Including one deviation from these two important deviations is related to the whole country and the second deviation is related to Tehran and the projects that have recently been planned to be built in the capital in the form of the national housing movement. The existence of these two deviations causes that even if this policy is implemented in the specified time, i.e. the duration of the two-year construction period, or in other words, one million residential units in the country are included in the construction plan, at least in the short and medium term, the crisis of inability to buy and Housing rent for the applicants of this market caused by the jump in prices. Investigations show that if the new Minister of Roads and Urban Development and other officials insist on implementing the policy of building one million houses per year, they should identify these deviations and take action to eliminate them.
The first deviation, which is considered a national and national deviation, is related to the existence of a fault or a big gap between the construction contracts of state-owned units and the reality of construction costs in the market. The numbers and figures announced by the builders about the estimated cost of building each square meter of housing in the country show that the figure of government housing construction contracts is around 30% away from the actual cost and the price of the construction day in the market and is less than that. That is, the figure determined in the government housing construction contracts is actually around 30% lower than the daily cost of housing construction in the construction activities market. For example, based on the details of some contracts that were concluded last year between the contractor and the government for the construction of units of the National Housing Movement Plan (the policy of building one million housing units per year), the figure set in these contracts for the construction of each square meter residential unit around 3 million tomans, while last year, the cost of building each square meter of housing was usually above 5 to 5.5 million tomans.
Starting the project with demand deficiency
The narrative of construction companies and contractors active in the plan to build one million residential units per year, in addition to these two deviations, indicates that the major projects have started with an average of 30% defects in membership. This means that according to the announcement of the construction companies active in these projects, for every 100 residential units under construction, only 70 effective members and real pre-buyers have been introduced to them, and practically most of the projects are currently with a deficit of 30%. Applicants and pre-buyers begin. This is despite the fact that an important condition for allocating bank loans to projects is that there is an active pre-buyer for the project for each residential unit who, after confirming his conditions by the housing trustee, opens a bank account and deposits the first stage. He has applied for a share. The builders cited the financial inability of the applicants to provide the required amount as an important reason for this defect and believe that because many applicants do not have the necessary ability to provide the applicant’s portion of the required amount, the risk of falling demand for these projects is likely. According to them and some other experts, there is no other way except to increase the ceiling of bank facilities, for example, around 600 million Tomans to build these units. Currently, the average bank facility for this project in the country is around 350 million Tomans.
The important point is that in the Mehr-e-Vayed housing, the applicant’s cash contribution was around 10% of the construction cost and the rest was provided from the bank facility. But in the national housing, this equation is almost the opposite, and the cash contribution has a share of nearly 60% in providing the financial resources needed for the construction of these units. In fact, the average cost of building each residential unit in the form of a plan to build one million housing units per year is around 1 billion tomans, which by calculating the average loan amount of 350 million tomans, practically 60% of the construction cost of these units must be paid from the site. Applicants will be provided. This is despite the fact that many eligible and applicant households are not able to provide this income.
Better version for pricing
In the situation where the determination of the price of government housing construction without considering the reality of the construction cost is an important deviation of this plan that can cause many problems in the construction and delivery of these units. Another problem related to the open and uncertain price of these units for It is pre-purchasers. Although by calculating the cost of the construction day, the price of each residential unit of this project is estimated to be around 1 billion tomans, but it is still not clear at what price these units will finally reach the consumer. In fact, this plan can be introduced as a type of pre-sale with an open price, contrary to the custom of the housing pre-sale market. It is better if the government plans to continue this plan and change the conditions in such a way that by determining the cost of construction in accordance with the market reality, the lump sum price of the units will also be determined and announced to pre-buyers, taking into account percentages for unpredictable fluctuations in construction costs. In this way, both the builders will be encouraged to build and deliver the units as quickly as possible to stay away from the consequences of construction inflation, and the pre-buyers will have the possibility to measure their financial ability to enter this project from the very beginning, and therefore the risk of falling demand in The future will be dimmed due to the financial inability of the applicants.
Source: the world of economy