Financial Tribune- Iran will need to build more than five million new homes in the next decade to fulfill its household requirements, the deputy for housing at the Ministry of Roads and Urban Development said.

Hamed Mazaherian made the statement in his speech at the two-day Fifth National Conference on Applied Research in Civil Engineering, Architecture and Urban Management that commenced on Wednesday at Milad Tower in Tehran.

"For the next 10 years, we must create homes for 29 million people … Research and data currently tell us that we will need about 5.3 million homes for the newlyweds in the next 10 years," he was quoted as saying by the MRUD news portal.

As Mazaherian noted at the event, the latest census showed 24 million households are residing in the country, while Iran has 27 million homes, although 2.6 million of them are vacant and 2.1 million are second homes used occasionally during the year.

The fact that 19 million people are living in poor housing conditions even as millions of homes are empty is indicative of an acute "lack of balance" in the housing market, the deputy minister added.

In addition to the new homes, Mazaherian said about 3.8 million residential units must be reinforced which, presuming a 5.4% economic growth rate and a 2% population growth rate, will bring the grand total of homes needed to more than nine million by the end of the fiscal 2026-27.

He predicted that about half –1.3 million–of all the empty homes that are mostly luxurious units beyond the purchasing power of a majority of people will also be occupied by that time, proving helpful to the total housing requirements of the country.

The official said Iran has a whopping 140,000 hectares in distressed urban areas, which is twice the size of the capital Tehran and presents a threat, as it plays host to about 30% of the country's total population and also indicates an opportunity for investment.

"The target set by the parliament for the ministry is to renovate half of all distressed areas by the end of the Sixth Five-Year Development Plan in 2022, which is a significant number and requires a budget of 1.23 quadrillion rials ($28.27 billion)," he added.

Mazaherian hailed the private sector's investment of about 600 trillion rials ($13.7 billion) in the housing sector, but said major builders strictly engage in housing construction while the ministry envisions the improvement of the overall housing quality in neighborhoods.

Improving Standards

Abbas Akhoundi, the two-term minister of roads and urban development, also addressed the event and mostly focused on ways of improving the professional standing of the civil engineering system.

He called for stronger supervision over civil engineers, which will lead to better quality buildings, and proposed that insurance companies take charge of guaranteeing the work and responsibility of engineers.

At present, civil engineers are required to gather dozens of signatures from peers that will act as the seal of approval on their work, a process which Akhoundi referred to as a "faulty cycle" that will certainly "fail to yield high-quality products".

Ahmad Khorram, the head of Tehran Association of Builders, was the other major figure addressing the audience at the landmark Milad Tower.

Referring to the current condition of Iranian housing market, the official said data show that home prices increased by about 10% for two consecutive months, which also created a momentum in the number of home sales, but the market has turned stagnant yet again.

"The liquidity in the country stands at around 14 quadrillion rials ($321.8 billion) while only 300 trillion rials ($6.89 billion) have been allocated to the housing sector," he said, stressing that the housing sector cannot be stimulated with this figure.

Khorram, therefore, called on the government to take care of dilapidated buildings and housing sector by allocating more suitable facilities with lower rates.

Majlis Research Center, the in-house think tank of the parliament, has found that the 2018-19 budget bill showcases the same yearly weaknesses as its predicted measures and sources of credit cannot meet the needs of the sector and will be unable to resolve its challenges.