Iran Economy News One Meter of Housing, Equivalent to One Year of...

One Meter of Housing, Equivalent to One Year of an Iranian Worker’s Wage

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After much debate and conflict, finally, on April 9, the Supreme Labor Council approved the minimum wages of Iran’s workers without their representatives having a say.

And after the many protests in recent months, the Department of Labor stepped back and accepted to increase the income of the workers by 26 percent. Eventually, the income of a worker’s family with one child reached 27.18 million rials [$105].

The Average Price of a House in Tehran is 270 Million Rials

The Central Bank also published a report on the developments in the capital’s housing market in November of this year. The report states:

“The average purchase and sale price of one square meter of residential unit traded through real estate agencies in Tehran was 271.9 million rials [$1045], which compared to the previous month and the same month last year shows an increase of 1.8 and 118.2 percent, respectively,” Kasb-o-Kar daily wrote on November 26.

Aside from the above-mentioned news, one can guess the possibility of housing purchase by workers and other poor sections of society. That is, of course, if they are not among the millions of workers and toilers who are unemployed and have no salary. One of these countless needs is the cost of medicine and treatment during the coronavirus pandemic.

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One-meter House per Year, the Yearly Salary of the Workers

In September of this year, a member of the Parliament revealed: “If a worker saves all his wages during the year and just breathes, he can buy one meter of a house in a year. Where are the oppressed in government decisions?” Alefba daily wrote on September 1.

At that time, according to the Central Bank, the average price per square meter of a residential unit was 230 million rials [$885].

A month later, the price of a house increased again and reached an average of 242 million rials [$930] per square meter. This meant that the price per square meter of housing in September 2020 has increased by about 91 percent compared to September 2019. Now with this significant price increase, how many years should people wait to buy a house?

With a simple calculation, we can say that if the minimum wage of workers is about 27 million rials and the total yearly income of workers is 312 million rials [$1200]. Assuming a worker saves his entire annual salary, he can only buy 1.2 meters of housing.

Therefore, assuming that housing prices and minimum wages remain the same, a worker must save 46 years of his full salary to be able to buy a 60-meter house at a price of about 14.52 billion rials [$55,846].

For a long time, the ill-considered plans of the governments in Iran—from Ahmadinejad to Rouhani—to provide housing have made the insufficient facilities and capital used for construction unusable in practice, and housing has been built in places and situations that has become a public problem.

One of the examples is the “Maskan Mehr” project, which has wasted many of the national resourses and cannot be reversed.

In this regard, a member of the Alborz State Labor Council said: “Land should be allocated in a place where there are basic facilities for living. Why should we build a house on the top of a mountain or give land where there are no roads, water, gas and electricity that takes years to resolve?” ISNA news agency wrote on November 28.

“If we are looking to build social housing and we want members of society to become homeowners, we must reform the infrastructure of housing construction and provide free land and cheap loans so that people can afford housing,” ISNA added

He said that building a house requires money and workers are not able to build with low wages, and added that no worker can buy a house with 28 million rials [$107], even on the outskirts of cities, let alone build a house. The rents paid by workers consume more than half of their wages and earnings, and in many cases, they cannot afford to pay for living costs.

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In connection with this issue of housing, banks could provide the cost of housing construction in the form of appropriate facilities, while we see that these facilities have changed direction in the service of brokers and transactions outside of bank duties.

According to statistics reported by Fars News Agency on November 27: “The share of the housing sector in bank lending facilities has decreased from 17 percent in 2011 to 7 percent in 2019, and only 3 percent of it is allocated to housing construction. While ignoring this major share, banks have spent their facilities on early repayment of loans to the unproductive sector of the economy.”

Due to the change in the form and nature of economic activities in Iran and the move to increase unproductive activities, the banking system in Iran tends to pay short-term facilities and housing facilities are not suitable for bank due to its long repayment period.

Bank lending facilities are generally allocated to quick-return facilities, which are mainly used in unproductive but profitable sectors such as trading and importing luxury goods and buying and selling land, etc.

In this regard, Hossein Raghfar, an economist, said about the impact of the way banks provide facilities: “In the current situation, most of the bank facilities are allocated to quick-return activities, and create the ground for increasing inflation,” Ayyar online website wrote on November 28.

Let us hear the unfinished talk about the deplorable situation of house preparation from the Deputy Speaker of Parliament, who says:

“We currently have 2.5 million luxury homes nationwide, while some are homeless and unable to afford them. 1.5 billion rials [$5770] per square meter to buy a house in Tehran is not wise. The government wasted six years of its life on housing,” Jahan News website wrote on November 26.

Homeless Citizens and Iran’s Housing Mafia

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