Neşecan Çekici, the new president of GYODER has highlighted a potential housing crisis. Down below we are sharing an excerpt (summary) from her evaluations.
“Mortgage-backed home sales have significantly declined, with mortgage utilization dropping from 39.8% in 2013 to 14.5% in 2023, and further down to 9% in the first half of 2024. Only 51,000 of 545,000 sales in the first half of 2024 were financed with bank loans.
Housing Demand and Production:
Turkey’s annual need for new housing is around 800,000 units, but production has fallen to 400-500 thousand units in recent years.
On the other hand home sales decreased by 3.7% in the first half of 2024. Foreign home purchases dropped by 48.1% in 2023 and by 45.7% in the first half of 2024 compared to previous periods.
Market Dynamics and Economic Impact:
Demand has shifted towards well-located and well-engineered projects, becoming more selective. A strong cash flow period in real estate is leading to higher bargaining margins, particularly lowering prices in the high segment.
Housing prices increased by 54% nominally over the past year, but when adjusted for inflation, the real increase shows a 9% decrease.
Building Permits and Demographics:
Building permits increased from 699,000 in 2022 to 855,000 in 2023. The average household size has decreased, leading to more solo living households, with 5 million households now having individuals living alone.
Construction Costs and Tax Regulations:
The construction cost index increased 14 times since 2015, with significant increases in material and labor costs. New tax regulations impose a 30% corporate tax on REITs (Real Estate Investment Trust) and REIFs (Real Estate Investment Fund) that do not distribute 50% of their real estate earnings.
This regulation might reduce the funds available for new investments, potentially impacting the sector’s ecosystem.
Conclusion:
The ongoing difficulties in the real estate market, if not addressed, could lead to a severe housing crisis in Turkey. Economic improvements and supportive regulations are crucial to easing the current bottleneck in supply and demand.
original article (in Turkish)
ekonomim.com/kose-yazisi/barinma-krizi-geliyor/758090
