Government and Housing Pricing: Yes, No

Government and Housing Pricing: Yes, No

Considering the responsibility that I had in the Deputy Housing and Building Department of the Ministry of Roads and Urban Development, I have been faced with the question of whether it is necessary for the government to intervene in the issue of housing price control.
To answer this question, I find the following text written by Dr. Behrouz Maleki and published on @bazarmaskan channel useful and largely in line with my opinion.

Hamed Mazherian- 14 September 2018

The duty of the government in the housing sector is to make policies, monitor and facilitate the relations of activists, and the art of the government is to bring the indicators of the housing sector to the optimal point by observing the mechanism and rules of the market.
However, in the economic culture of the popular people, the government’s direct intervention in the housing market and pricing, even for a heterogeneous product such as housing, is considered as a solution to deal with the high cost of housing and housing rent, which has no result other than erasing the problem.

This issue can be taken into consideration and exploited by the populists in the guise of consumer protection to deal with the manifestations and consequences of inflation by resorting to shortcuts such as pricing. Based on the experiences of the previous boom periods of the housing market, the policy makers of this sector face pressure from the public opinion, in order to directly intervene in the prices of the housing market during the boom period, which can lead to the reduction of the resistance of the statesmen and sometimes, turning to punitive and restrictive measures in the market. provide housing.

A long-term look at the internal and external experiences of the government’s price intervention in the market of buying or renting housing indicates that these policies, after some time, have turned against themselves and caused the formation of a lose-lose cycle between the supply and demand side. will be As a result, pricing in housing can be likened to drinking salty water to a thirsty person, which temporarily reduces thirst, but after a while causes thirst to intensify. It is important to note that economic policies can have a dual function; So that many of the policies that are pleasant for the public in the short term, in the long term, leave unfortunate and unfavorable economic consequences and vice versa.

Probably, for many people, it will not be tangible that many problems originate from the same economic policies that have been pleasant for them, and in contrast to the economic benefits they receive, they are the result of the same economic policies that have sometimes not been so pleasant for them.
On this basis, developed countries have realized that emotional and populist approaches are not the solution to facing economic issues, and policies such as pricing have been removed from the policy cycle of the housing sector in these countries for several decades.

@HamedMazaherian

This post is written by monese_ghamgosar