Soaring real estate prices deepen Iraq's housing crisis

Soaring real estate prices deepen Iraq's housing crisis
2025-01-20T09:57:02+00:00

Shafaq News/ Iraq’s real estate market is witnessing rapid expansion, with residential towers and commercial developments reshaping urban landscapes. However, beneath this growth lies a deepening housing crisis fueled by soaring property prices, leaving millions of Iraqis struggling to secure adequate shelter.

The Crisis Drivers: Demand Outpaces Supply

Several factors contribute to Iraq’s housing crisis, including a population boom, inflation, and rising construction costs. Government statistics reveal that Baghdad alone faces a housing deficit of 31%, highlighting the scale of unmet demand across major cities.

Mutaz Al-Hasani, owner of Al-Sabah Real Estate Agency, illustrated the disparities in Baghdad’s property market. “In affluent districts like Al-Jadriya, Mansour, Yarmouk, Palestine Street, and Al-Saydiya, prices range from $3,000 to $7,000 per square meter,” Al-Hasani told Shafaq News.

“Meanwhile, lower-income neighborhoods, such as Sadr City and Al-Zaafaraniya, offer more affordable rates of 1 to 2 million Iraqi dinars ($680 to $1,360) per square meter.”

Apartment prices are similarly affected. Al-Hasani noted that a 100-square-meter unit can cost between 200 million and 500 million dinars ($136,000 to $340,000), depending on location and proximity to city centers. These prices are unaffordable for most Iraqis, given stagnating wages and limited financing options.

Government Initiatives: Limited Reach

The Iraqi government has introduced several initiatives to address the housing shortage, including the Bismayah residential complex. This state-backed project offers fixed-price apartments with installment plans, requiring a 10% down payment and a 25-year repayment period at a 4% annual interest rate.

According to a source at Al-Rafidain Bank, “a 100-square-meter apartment in Bismayah costs 83,160,000 dinars ($56,550), while larger units are priced proportionately higher.”

However, these efforts have fallen short. “The government-built housing complexes do not meet the actual needs of citizens,” said Nabil Al-Saffar, spokesperson for the Ministry of Construction and Housing.

Al-Saffar noted that Iraq requires an additional 60,000 housing units annually to close the gap between supply and demand.

The Role of Inflation and Speculation

Iraq’s real estate market has also been hit by soaring inflation, with prices in some areas climbing over 120% in recent years, according to Shafaq News reports.

Economic expert Nabil Al-Marsoumi criticized the government’s failure to curb speculative investments. “Wealthy investors acquire multiple properties, driving up prices and locking out ordinary citizens,” he explained.

In addition, speculative trading and money laundering have exacerbated the crisis. A recent Shafaq News investigation revealed that real estate is a favored avenue for laundering illicit funds, with high-end developments often funded by corrupt practices.

“Permits for luxury complexes are frequently issued without price controls or oversight,” said economic expert Durgham Mohammed Ali. This has created a market focused on profit rather than accessibility, leaving most Iraqis unable to benefit from these projects.

Rising Construction Costs

The surge in construction costs is another barrier to housing affordability. Contractor Ali Al-Lami reported that building a home in Baghdad costs between 400,000 and 1 million dinars ($272 to $680) per square meter, depending on materials and finishes. “The differences stem from variations in material quality and imported components like plumbing and electrical systems,” Al-Lami told Shafaq News.

“While some private companies offer installment-based construction services, these initiatives remain insufficient to address the broader challenges of affordability.”

Efforts to Stabilize the Market

Government officials acknowledge the growing demand for housing and have promised solutions. Proposals include stricter regulations on speculative investments, incentives for affordable housing developments, and partnerships with international firms to leverage innovative construction technologies.

Meanwhile, falling real estate prices in some regions offer a glimmer of hope. Analysts attribute this decline to “reduced speculative activity and a shift in market priorities,” potentially creating opportunities for low-income families to access affordable housing.

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