Analysis of Housing Economics and Productivity of Housing Production, Sanandaj, Iran

Document Type : Research Paper

Authors

1 Professor of Geography and Urban Planning, Faculty of Geography, University of Tehran, Tehran, Iran

2 Professor of Geography and Urban Planning, Faculty of Geography, University of Tehran

3 Assistant Professor of Geography and Urban Planning, Faculty of Geography, University of Tehran, Tehran, Iran

4 PhD Candidate in Geography and Urban Planning, Faculty of Geography, University of Tehran, Tehran, Iran

Abstract

Introduction
Housing as one of the stellar biological needs of human beings has attracted a major theoretical, technological, and materialistic attentions of many researchers. During history, meeting this need and its quality has been dependent on cultural, environmental, historical, economical, and technological conditions. World population and urban life's intense increase more than 50 % and it is expected to increase more than 68 % by 2050. This turned the challenging problem of housing into a crisis. This problem is of greater importance in developing countries due to the fact that their societies are mainly constituted by low-Income (middle-class) people. In Sanandaj, in addition to the situation we see the national level of housing sector that is due to population growth and intense urban life growth. In the region, other factors like general level of income have caused shortage of house especially among weak people who are about 35% of the population there.        
In housing market, there are a lot of related economical indices such as family saving, cost and income, profitability rate of land and housing market, land and house price and productivity of housing production factors. This study tries to probe into principal economic reasons of increased gap between offer and demand in housing sector in Sanandaj.
Methodology
The study is an applied research conducted through a descriptive-analytic method. To collect data, we have used library-based and field method for the needed data. The data have been gathered through formal sources like Iran Census Center and Iran Central Bank.
Results and discussion
Changes in housing quantity have been considered for studying housing market and influential economic condition of this sector. Based on the obtained results, the gap between housing offer and effective demand is increased since 1976 so that the ratio of number of families to number of houses is reduced from 1.0015 in 1976 to 1.15 in 2006. Furthermore, house shortage rate in Sanandaj in comparison with the number of families, without considering demolition rate, is 10760 units.
Land and house price, and lease cost are significant indices for analyzing supply and demand in housing market. Annual growth of land in the abovementioned period of time (1976-2006) is 31.15% while cost experienced 25% growth. 
By comparing house and land cost rate growth and inflation growth rate, it is possible to perceive the importance of house in economical transactions which can also lead to brokerage growth. During this period of time, land, house, and leasing cost growth rate have been always more than inflation rate (17.4).
At the same time, Sanandaj families' income growth rate in this period has increased to 16.6 which can be interpreted as a huge gap between potential and effective demand in a 28% growth in land price and a 31% growth in housing price. Family saving as a main source of renting house with a fixed price of has been always negative except in four years; whereas, banks loans , on the average, in the last ten years has decreased from 67%  to 10.6%  in 2002.
The average bank loan is increased from 81 million Rials in 2002 to 192.6 million Rials in 2010. The other main index is the economical profitability of land market in comparison with the profitability rate of house construction market in which we have witnessed an annual growth in both of them. However, at the end of the period, the profitability rate of house construction is 5 times more than that of the land. The productivity rate of renting house has been studied based on the interpretation of the factors. Therefore, the productivity rate of capital with a fixed rate has been positive. The growth rate of added value in housing sector in this period, on average, has been 30.25; that is, for any Rial investment, there is a 30.25 Rial added value. Also, the productivity rate of land that was 1.017 units in 2002, has remarkably reached 2.55 units in 2010. The productivity rate of work force is increased from 5.2 in 2002 to 22.9 in 2007. In other words, any work force has provided 22.9 million Rials added value in housing sector. Its average annual growth has been 34.5 during this period.
Conclusion
Results of the study have demonstrated that housing has not been a problem by 1976. However, at the end of the period, 1976-2006, we have encountered, first, a problem called houselessness and house-badness specifically in obliterated fabrics in Sanandaj city, and second, a house shortage of 15% of in its inventory. Based on the obtained results from housing economic indices and its financial production mechanism, accentuation on family savings for its financial renting seems fruitless. The continuous growth in house price with its remarkable added value can indicate that by omitting and reducing land price, the cost of house construction will be transmitted to the other sources and methods of house financial provisions such as bank facilities growth to 80% for house purchase and construction, deposit loans, tax exemption, and activating financial sources of the private sector. We can also pace towards social housing production methods, rent on the condition of owning and eventual construction.  

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Main Subjects

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Human Geography Research
Volume 51, Issue 3
October 2019
Pages 571-586

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History

  • Receive Date: 29 January 2017
  • Revise Date: 11 March 2018
  • Accept Date: 11 March 2018

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