Serious housing crisis creeps up on Iraq
Iraq is facing a difficcult housing crisis due to oil prices dropping amid the coronavirus pandemic.
Since the oil prices dropped as a result of the coronavirus pandemic, issues regarding Iraq's financial obligations have begun to escalate, in light of the complete dependence on oil revenues to pay salaries and activate the economy. Making matters worse is Iraq’s commitment to reduce its share of oil exports within the April OPEC agreement.
In light of the expected salary deductions by the government, and the current financial crisis that has led to a delay in paying salaries in the majority of government departments, tenants are beginning to experience an emerging crisis, not only for commercial shops and institutions but for residential housing as well.
Basem Khamis, professor of financial policy at the College of Administration and Economics at the University of Baghdad, told Al-Monitor, "Deducting salaries means decreasing the overall demand of the Iraqi market, which indicates that the economy is entering into a recession. We have witnessed this recession with a decrease in the total consumption and an increase in savings in anticipation of the expected salary deduction.”
Khamis explained the link between the deduction of salaries and the housing sector, saying, “The housing sector will be affected if salaries are reduced, as employees will no longer apply for housing loans and the demand for housing will drop. The housing sector is directly linked to the construction sector, which is a key sector in the economy because it generates work for other major sectors. Any deterioration in the housing sector will mean lower levels of per capita income, which leads to a decrease in the speed of money circulation and thus an economic downturn. The economic catalyst is consumption, and any disruption to consumption will lead to strangling the local economy or the business cycle.”
