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Effective government steps to control real estate prices
Economic 07/24/2024
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Various government agencies have doubled their efforts to control real estate prices, after they witnessed unprecedented increases in Baghdad and the governorates. While the Minister of Construction and Housing announced the acceptance of all loan transactions submitted to the Housing Fund, the Real Estate Bank revealed raising its capital to 500 billion, and postponing the collection of interest for five years. These steps were welcomed by a number of economic experts, who stressed that these measures would curb the real estate prices that have soared in various Iraqi cities, and have limited the ability of middle-income people to purchase a housing unit.
The "financial steps" aimed at providing liquidity to those wishing to build or purchase housing units were preceded by steps revealed by the Ministry of Construction and Housing earlier, related to a plan to reduce housing unit prices, which includes the direction to establish 7 residential cities for investment during the coming period, while economic experts renewed their calls for the necessity of involving the government in housing projects, and introducing the public sector as a basic partner in building these complexes with the aim of reducing interest rates on citizens.
The Director of the Real Estate Bank, Abbas Al-Jawahri, said in a statement to the Iraqi News Agency (INA): "The Real Estate Bank increased its capital by 500 billion dinars after it was 50 billion dinars," indicating that "this will increase the bank's activity in financing investment projects and lending to citizens to buy housing units," noting at the same time that "the new Central Bank initiative includes postponing deductions for 5 years for loans, which allows freedom to recycle funds."
These government trends, according to the housing expert, Dr. Ikram Abdel Aziz, represent important steps that will limit the rise in real estate prices, stimulate the private sector, and enhance development rates.
“The housing crisis is a deep-rooted crisis, not a new one, and Iraq has been suffering from it for decades,” Abdul Aziz said in a statement to Al-Sabah. “However, the current trend is important and constructive, as expanding the process of granting loans to build or buy housing units, or granting loans to investors, is a positive thing that will put an end to the growth of real estate prices in Baghdad and the governorates,” she said, indicating that individual loans are important to reduce the housing crisis and narrow its gap.
Abdul Aziz explained that “the current government trend has a positive and constructive role in stimulating the economic cycle, as bringing in these funds can create sectoral entanglements, and lead to activating many crafts and revitalizing construction markets. Therefore, this trend will not only eliminate the housing crisis, but will also lead to stimulating nearly 50 crafts.” The expert expressed her surprise at the significant increases in real estate prices in the country, which made it difficult for middle-income individuals to obtain a housing unit due to the continuous increase in prices, stressing that the government’s doubling of its efforts in granting loans represents a key point towards reducing these increases and enhancing citizens’ confidence in these official efforts, noting that increasing the capital of the Real Estate Bank and accepting applications from the Housing Fund, and other government moves, will be a key element in reducing real estate prices in the country and activating the role of the private sector, and that these trends are part of the government’s program that stipulates strengthening the role of this sector and making it a partner in economic decision-making, which leads to raising the gross domestic product.
Abdul Aziz believes that the government's efforts to eliminate the housing crisis have several positives other than providing homes, such as employing thousands of workers and reviving local industries, stressing the need to tighten financing management in a manner consistent with preventing defaults in repayment processes in order to continue financing.
Earlier, economic expert Manaf Al-Sayegh expressed his surprise in a statement to "Al-Sabah" that banks have imposed conditions that he described as "unreasonable" on attempts to obtain housing loans, and instead of putting in place a real hedge to recover their money, they impose "catastrophic" interest on these loans, calling for easing the severity of the conditions for obtaining the loan and reducing the interest rate in order to achieve the highest possible success rates.
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