As the government’s first official report on housing market conditions revealed a fifty to hundred percent increase in housing prices, the Ahmadinejad Administration halted one of its most conspicuous campaign promises of handing out 100 million rials [about 11,000 USD] in loans to every low income family. It is said that with the approaching of next year’s elections in March, the government will be forced to halt several other controversial programs.

The minister of housing announced scrapping a government initiative to lend 100 million rials to every low income family. He acknowledged that such payments create inflation and put pressure on prices in the housing market.

Eight months ago, Ahmadinejad told Majlis deputies, “the price rise in the housing market is fake and the minister of intelligence will soon inform you of what network is behind the scheme and put an end to it.”

But on Thursday, housing minister Saeedikia told reporters, “We will review our decision as payment of such loans creates price pressures and inflation in the housing market.”

The plan began early last year as more than a million participants signed up to receive such loans, but was suddenly halted. After 1.5 years, government experts finally acknowledged that this program put upward pressure on housing market prices.

E’temad Melli daily wrote that the housing minister, in a meaningful manner, announced halting a plan that many experts blamed for bringing about the current inflation in the housing market. The government’s official figures show a 31 percent rice in land prices and a 46 percent rise in apartment prices in Tehran.

The report, which is the first official report on housing market developments since the coming to power of the Ahmadinejad Administration, was released last week in a journal published by the ministry of housing. The report indicates that the average price for one square meter of apartment space in Tehran, which was about 6.5 million rials [about 726 USD] in the winter of 2005-6, increased to 12 million rials [about 1341 USD] by the next winter.

Economic experts warned about a hyperinflation in the housing market, but government officials led by President Ahmadinejad insisted on implementing uneconomic plans such as handing out large sums of loans. All the while, the government accused critics of having alternate plans and disseminating false information.

Under such conditions, political analyst expect the government to be facing a hard choice ahead of the upcoming Majlis elections: either to stop many of its propaganda programs and accept economic realities, or to continue implementing such programs and risk a clash with lawmakers, especially over passing a budget bill for the upcoming year.