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High real estate prices push citizens to buy in neighboring countries
Economical 06/05/2023
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Baghdad: Haider Fleeh Al-Rubaie
The interest rates imposed on housing loans exacerbated the real estate crisis in the country in general, and in Baghdad in particular, especially after those interests sometimes reached half of the amount granted to the beneficiary, in a phenomenon described by many economic specialists as "real blackmail" practiced by banks. Which is taking advantage of citizens' urgent need for housing, calling for the launch of a package of immediate and quick solutions to confront the high cost of real estate in the country, including imposing strict control on banks that grant housing loans and doubling the allocations of banks and government agencies concerned in this field.
In a step that the specialists see as important in limiting the increases, which they described as "crazy" of housing prices in Baghdad, which prompted many to buy in neighboring countries, they suggested entering the Central Bank, government banks and the Ministry of Housing in investments to build housing complexes that will be distributed to citizens at reasonable prices and with benefits closer to " zero," stressing that this step can contribute to achieving two important goals, the first is to reduce housing prices, and the second is to impose moderate benefits on citizens.
The ministry's spokesman, Nabil Al-Saffar, told the Iraqi News Agency (INA): "The new residential city projects, including the investment opportunities that amount to five projects, which were announced recently, mainly target the middle and poor classes, stressing the addition of a binding clause on investors to sell units at reasonable prices." And not to speculate in prices, and this was fixed in the private investment contract.
Despite the widening volume of government moves aimed at eliminating the housing crisis, however, the high interest rates imposed on housing loans by government and private banks still constitute a real obstacle to the chances of eliminating this worsening crisis, and as confirmed by a member of the Iraqi Economists Association, Researcher Muqdam Al-Shaibani, who expressed his surprise at the suspension of some housing lending projects by the Central Bank.
Al-Shaibani believes, during his interview with Al-Sabah, that the housing crisis could worsen during the coming periods as a result of the incapacitating instructions of banks that grant loans to purchase housing units, stressing that these instructions contain catastrophic profits that are far from solving the housing crisis and are not commensurate with the capabilities of those with limited incomes. He expressed his surprise by saying, "The instructions of banks that grant housing loans target only the rich."
Al-Shaibani inquired about the reason for stopping the Central Bank’s initiative (the housing lending initiative), stressing that it is one of the best housing initiatives launched after 2003 and provides support and liquidity for the housing sector (the Housing Fund) of the Ministry of Construction and Housing and the (Real Estate Bank) of the Ministry of Finance to lend to citizens and employees who wish. By purchasing housing units throughout Iraq.
In addition to questions about stopping housing loans, the economist Manaf Al-Sayegh believes, during his interview with Al-Sabah, that there is a problem that still persists in banking performance in general, represented by a lack of real understanding of the needs of society, resulting from the lack of a true and professional reading of reality, and this matter Resulting from the routine performance of these banks and the absence of creativity in the performance that enables them to produce supportive services for economic activity that can contribute to solving the problems that the citizen suffers from, especially housing.
Al-Sayegh also indicated that “the absence of a correct reading of the requirements of society by banks does not represent the only obstacle facing the citizen. This is a problem that cannot be understood, as the banker who takes into account the lack of confidence in the citizen, this represents the summit of problems in financial performance and reflects a backward mentality.
The economist expressed his surprise at the banks setting conditions he described as “impossible” in the endeavors to obtain housing loans, and instead of setting a real hedge to recover their money, they impose “disastrous” interest on those loans, taking advantage of citizens’ urgent need for housing, which is illegal and should be Accounting for those banks that are now "extorting" the beneficiaries of their loans, which are the highest in the world.
Al-Sayegh believes that banking laws have become a heavy burden on economic performance in Iraq and commercial activity, as there is an absence of services provided to citizens, and the search for high profitability in any activity they undertake without regard to other societal aspects, in addition to the high interest imposed on advances and loans. And the unfair conditions that accompany the granting of that money to citizens.
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