The economic prosperity fueled by the growing oil revenues of
the mid- 1970s encouraged a construction boom. The expansion of
the construction industry slowed, however, and all but stopped
after the Revolution. Construction continued to decline until
1984. The domestic recession, created by deliberate government
reductions in oil production in 1979, caused a drop in new construction
starts, fewer buyers, and a decreased demand for materials.
In FY 1983, the government decided once again to encourage private
sector participation in construction. The subsequent increase
in loans to private industries by commercial banks revived the
construction industry by 1984, although it could not keep pace
with housing needs in urban areas.
The housing shortage became severe by 1986. Exacerbated by population
pressures, the shortage was an especially serious problem in Tehran.
The allocation of credit for building construction accounted for
7 to 8 percent of the GNP. Half of all the 900,000 housing applicants
countrywide were in Tehran, yet only half of these received housing.
Tehran issued 25 percent of the country's housing permits, with
fixed construction investment accounting for 2 percent of the
GNP. The government deliberately discouraged further expansion
in Tehran, and new building construction regulations in 1986 tied
construction permits to the ownership of land through an earlier
order from a religious magistrate. According to the director of
the Urban Land Organization, a government body created in June
1979 to administer the transfer of nationalized land to deserving
families for housing purposes, the housing sector in early 1986
needed about US$10 billion to alleviate the shortage. The banks
could only provide about US$4 billion of this total.
Data as of December 1987