The enduring impact of decades of sanctions, corruption, conflict and displacement, as well as a steadily growing population has left Iraq grappling with a severe national housing crisis.
According to Abdul Zahra Al-Hindawi, the spokesperson for Iraq’s Ministry for Planning, the shortfall in housing units across the country stands at at least 2.5 million homes.
Since his ascension to power in November 2022, Iraqi Prime Minister Mohammed Shia al-Sudani has taken several measures to address this crisis, including launching projects to construct new cities nationwide.
However, Iraq’s housing problem is not just about a shortage of housing units; it is also underpinned by historically inconsistent funding for housing projects, corruption and uncontrolled rents.
Work on Bismaya — a landmark project that represented the Iraqi government’s first attempt to build new cities to address the housing crisis — began in 2013 under the Nouri al-Maliki administration and was due to be completed by 2020. While some residents have moved into completed areas of the city, construction is still ongoing.
The project was temporarily halted between 2020-2022, allegedly due to Baghdad’s failure to pay South Korean development firm Hanwhaa Engineering and Construction Company for work carried out on Bismaya between 2019-2020. The Iraqi government’s inability to continue paying for the project is said to have been a result of a decline in oil prices over the two years prior.
Speaking to The New Arab, Zahraa Albachachy, an Iraqi economic adviser, warned that a renewed decline in oil prices could impact the government’s ability to deliver the 11 new housing projects that, according to the current Iraqi government, are set to be built across the country.
This is due to Baghdad’s continued over-reliance on oil sales, which account for over 90% of the Iraqi government’s annual revenue. Construction on housing projects has also stalled for several other reasons.
Recounting her own experience, Zahraa stated that construction on the apartment in Baghdad’s Al-Saidaya, which she paid for in 2021, has yet to commence. At the time of purchase, clients were told that the apartments would be ready within 1-2 years.
In Zahraa’s case, an individual reportedly affiliated with a member of the Iraqi parliament won a contract to develop a housing project on government-owned land but never began construction.
Zahraa had been told that the contract would be completed by another organisation, but four years on, no tangible progress has been made.
Rising costs and a commuting plight
Even once the new builds are completed, soaring prices will prevent many Iraqis from being able to purchase the homes.
“Pricing is not being monitored by the government,” asserts Ranya Bakr, an Iraqi economist. So now you have houses, specifically in Baghdad, that will cost over half a million dollars, with no clear reasoning for such inflated pricing.”
According to Ahmed Bukli, who has worked in the real estate sector for several years as well as on Iraqi social issues, government attempts to provide equitable access to housing have also indirectly contributed to raising rent prices.
Previously, the Central Bank of Iraq (CBI) provided loans of 150M IQD to working-class Iraqis to enable them to buy property.
“The loans themselves also contributed to the price increase,” asserted Ahmed, explaining that while they initially allowed lower-income families to access the real estate market, the absence of available housing and government oversight over rent prices made the loans redundant, leading to the discontinuation of the CBI loans.
The absence of employment opportunities outside of major cities such as Anbar and Baghdad also exacerbates the housing shortfall. Working-age Iraqis, who make up 60% of the population, move into these cities in search of employment, which in turn drives up demand for housing units.
“The biggest issue in Baghdad is population growth because very few other provinces have jobs,” states Zahraa.
Even for those who manage to find housing in Iraq’s capital, connectivity remains an issue. Since 2008, successive political administrations, including Iraq’s current government, have announced the construction of a metro system in Baghdad. However, internal political disputes and questions over funding have also impeded progress on this initiative.
Discussing the lack of public transport, Ahmed highlighted that “for workers in the centre of Baghdad who live on the outskirts of the city, the situation is unbearable. It is a two-hour commute each way.”
While some private firms working in Iraq exclusively develop government-owned lands, a handful of Iraqi companies have sought to innovate in the real estate sector without working with Baghdad.
Real estate amid a power crisis
Mahdi Zewin, who co-launched Bayt Iraqi, a real estate firm, in 2024, emphasised how his organisation has sought to bypass Iraq’s chronic electricity shortage.
“We have recently added solar panels to our serviced apartments,” Mahdi told The New Arab.
He added that in cities across the country, Iraqis often experience power cuts lasting up to 10 hours a day, while those in rural areas face even longer service interruptions.
In addition to mitigating the impact of sporadic energy provision, the installation of solar panels also allows real estate developers to avoid the complexities of attaching projects to government electricity lines, for which competition is stiff.
Bayt Iraqi’s innovative approach to navigating Iraq’s real estate climate has seen the organisation attract significant foreign investment, primarily from Iraqis in the diaspora who are looking to buy second homes in Iraq.
At a national level, recent years have seen Qatar, Saudi Arabia, and the UAE launch cautious investment projects in Iraq, predominantly in the real estate and electricity sectors.
Iraq and Gulf Cooperation Council (GCC) member states have also taken steps towards linking Iraq’s electricity market to that of the GCC, highlighting Baghdad’s attempts to leverage foreign investment to address the multifaceted nature of the domestic crisis.
Baghdad has also taken steps to strengthen Iraq’s investment climate, including the government’s signing of the Singapore Convention in April 2024, which saw Iraq adopt an internationally uniform framework to enforce mediated settlement agreements in the country.
In recent months, Baghdad has also begun to implement measures designed to give the government greater oversight over financial transactions in Iraq’s real estate sector.
In January 2025, the CBI lowered the threshold for regulated property transactions from 500 million to 100 million IQD, to prevent individuals from concealing embezzled or illicit funds through property purchases.
All transactions made over the 100 million IQD threshold are to be conducted exclusively through licensed Iraqi banks.
This move could also play a role in stabilising house prices in affluent neighbourhoods of Baghdad such as Yarmouk and Mansour, where it is believed that some individuals have bought significant amounts of property in a bid to conceal illicit funds.
While Baghdad has made inroads in addressing what has been termed a “cumulative crisis” by Iraqi officials, a sustainable resolution to one of Iraq’s most pressing social issues will require the continued development of the national job market, energy provision, mitigation of corruption, the diversification of Iraq’s economy, and increased foreign investment.
“Progress has been made,” states Zahraa. “However, we still need more comprehensive solutions.”
Zahra Ladha is a geopolitical analyst focused on Iran, Iraq and transnational Shiasm. Zahra holds an MSc in Middle Eastern Studies from the University of Oxford
